European Stocks Edge Higher; U.S. Tech Sector Earnings In Focus
Frankfurt (May 2) European stocks posted modest gains at the open of trading Tuesday as investors returned from a May holiday weekend to stronger U.S. tech sector earnings and improving geopolitical sentiment.
The region-wide Stoxx Europe 600 index, the broadest measure of share prices, gained 0.25% to 387.62 by 11:00 BST, with healthcare and media stocks leading the advance. Britain's FTSE 100 was marked 35 points higher at 7,242 points thanks in part to a solid rise for BP plc (BP) and a weaker pound, which slipped to 1.2875 against the U.S. dollar before rising to around 1.29 after a better-than-expected reading for April activity in the manufacturing sector.
BP shares rose 2.6% to the top of the FTSE after in early trading, before paring gains to around 1.45% and changing hands at 448 pence each, after it posted a stronger-than-expected first quarter profit Tuesday and trimmed its capital expenditures amid a surge in global oil prices.
BP said net income for the first three months of the year was marked at $1.449 billion, the company said, taking underlying replacement cost profit to $1.51 billion compared to a loss of $583 million in the first three months of last year and a consensus forecast of $1.26 billion. Total first quarter revenues were marked at $55.863 billion, BP said, a 45% increase from the first quarter of 2016 as the company benefited from a sharp increase in global crude prices.
In Germany, the DAX performance index was marked 5 points higher while the CAC-40 in Paris added 18 points in relatively quiet trading.
Stocks in Asia tested two-year highs in overnight trading as the flow-through from a sixth consecutive record for the Nasdaq boosted tech-sector shares and lifted regional benchmarks. Japan's Nikkei 225 gained 0.7% into the close while the MSCI Asia ex-Japan index, the region's broadest measure of share prices, added 0.5% to approach the highest level since July 2015.
European sentiment, however, remains susceptible to both the ongoing presidential elections in France, which wind-up on Sunday, and the increasingly combative tone being established in Britain's negotiations with Brussels over its pending EU exit.
The pound drifted below the 1.29 mark against the U.S. dollar in overnight trading as investors trimmed holdings in the wake of reports that suggested EU President Jean-Claude Juncker had walked away from a private dinner with U.K. Prime Minister Theresa May "10 times more sceptical" over the ability to broker a comprehensive deal within the two year timeframe, according to a report from Germany's FAZ newspaper.
The euro, however, is holding onto gains against the greenback after last week's faster-than-expected April inflation reading, which hit the European Central Bank's 'just below 2%' target. Optimism from voter surveys in France, which show centrist Emmanuel Macron holding a solid 61% to 39% lead over far-right rival Marine Le Pen, is also adding to bullish euro bets.
Global oil prices extended declines in overnight trading amid reports that Libya's crude output past 760,000 barrels per day, the highest since December 2014. Coupled with near-record high U.S. stockpiles, investors remain more focused on oversupply concerns than they are on the prospect of an extension of OPEC's production cuts which, when coupled with Russia and other non-members, are taking 1.8 million barrels per day from the market.
That said, WTI Futures for June deliver were marked 0.1% higher at $48.96 by 11:00 BST while Brent contracts traded at $51.78.
Early indications from U.S. equity futures point to another record start for the Nasdaq, which is priced to gain 8.5 points, ahead of Apple (AAPL) earnings later today. Both the Dow Jones Industrial Average and the S&P 500 are also called higher, with top-end healthcare earnings reports expected from Pfizer Inc. (PFE) , Merck & Co. (MRK) and Gilead Sciences (GILD) .
Source: TheStreet
