European markets boosted as Chinese industry recovers
New figures revealing a marked recovery in Chinese industry have helped to boost sentiment upon European traders.
The main European markets all opened in positive territory, with the FTSE 100 pushing higher as multinational firms led the charge.
London’s top flight jumped 110 points higher to 5,673 points by 10.10am on Tuesday, as it continued this week’s rebound.
Russ Mould, investment director at AJ Bell, said: “Every little step forward for the markets will help to repair investor confidence following the catastrophic start to the year for equities.”
“Equity markets are taking their cue from various bits of positive data.
“China’s latest purchasing managers’ indices (PMI) data was better than expected and put the country back into expansionary territory.”
Analysts were expecting China’s manufacturing and services PMIs to post a healthy bounce to 44.9 and 42.1 respectively.
But the figures soared above 50 – the figure which represents growth – with a manufacturing reading of 52 points and services reading of 52.3.
The figures gave European traders a reason for cautious optimism, with firms who have operations in China, such as Prudential, moving higher.
Some of the heaviest hit firms on Monday, such as those in the travel and aerospace sectors, led the rebound on Tuesday morning.
Airline firms IAG and easyJet both moved higher, rising by around 8% and 5% respectively, as they found solace in the faster-than-expected improvement in China.
Supermarket firms were mixed in early trading, with Tesco slipping and rival Sainsbury’s rising despite new figures revealing a bumper month for grocery retailers as shoppers bought significantly more food.
Elsewhere in Europe, the German Dax index increased by 2.4%, while the French Cac rose by 1.6%.
On Monday oil prices fell to an 18-year low after Saudi Arabia revealed new plans to increase oil exports to 10.6 million barrels a day from May, a 6% increase.
It rebounded slightly by 3.1% to 23.49 US dollars per barrel on Tuesday after Russia and the US agreed to talks to help stabilise the markets.