Europe open: Stocks take their cue from yuan, rise despite China tariffs
Stocks on the Continent are seeing modest gains as the White House unveiled a measured package of new trade tariffs on Chinese goods on Monday evening, although some analysts cautioned against reading too much into that.
In particular, some traders appeared to take their cue from the movements in the Chinese currency, the yuan, which initially weakened against the US dollar but later recouped its initial losses.
Commenting on events overnight, Michael Hewson at CMC Markets UK said: "The deferred nature of the extra tariffs appears to have convinced some in the markets to indulge in some light buying on the basis that any ripple out effects from the latest tariffs are only likely to be felt further out in the revenue cycle.
"While that may be true it is also based on an assumption that the US is keen to make a deal. On current evidence it is far from clear that that this is a safe assumption to make."
Against that backdrop, as of 1107 BST the benchmark Stoxx 600 was edging higher by 0.09% or 0.33 points to 378.65, alongside a 0.29% or 35.65 point advance for the German Dax to 12,136.38.
Milan's FTSE Mibtel was the only one of the main European bourses in the red, slipping by 0.18% or 38.26 points to 21,072.74.
On Monday night, the US administration announced that 10% tariffs on another $200bn-worth of Chinese exports would go into effect on 24 September, rising to 25% next year.
That was less than the 25% duty which had been expected until recently. Indeed, according to Capital Economics, the recent 6% drop in the yuan would nearly offset those tariffs, while more expansionary policies from Beijing would offset the remaining roughly half a percentage point hit to the annual rate of growth in the country's GDP.
Nevertheless, US President Donald Trump threatened to pursue tariffs on a further $267bn of Chinese exports if the Asian giant retaliated, which Beijing said it would.
The economic calendar for Tuesday was quite light, although some traders were waiting on a keynote speech from European Central Bank President Mario Draghi.
In Italy meanwhile, ISTAT reported that industrial orders fell by 2.5% month-on-month in July, dragged down by declines in both domestic and foreign orders.
For later in the day, markets will be watching for the release of the US NAHB's housing market index for the month of September and figures on long-term capital flows in July.