European stock markets

European stocks climb on strong eurozone trade data

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European stocks opened higher on Thursday (Sept. 16) morning breaking from cautious global sentiment. Germany’s DAX opened 0.34% in the green, London’s premier index FTSE 100 began 0.22% higher, while France’s CAC 40 was up by 0.46% at the starting bell. The pan-european STOXX600 was up 0.72% around midday.

Sentiment was boosted after Eurostat data showed eurozone’s trade surplus increased in July on higher shipments.

Stoxx600

The first estimate for eurozone’s exports of goods to the rest of the world in July 2021 was €206.0 billion, an increase of 11.4% compared with July 2020 (€184.9 bn) boosted by sales of raw materials (29.8%) such as crude materials and fuels and lubricants; and manufactured goods (9.3%) on the back of chemicals and related products.

Among major trade partners, exports were up to Russia (19.1%), the US (9.7%), the UK (6.9%) and Switzerland (9.9%).

Imports from the rest of the world stood at €185.3 bn, a rise of 17.1% compared with July 2020 (€158.2 bn),  led by a jump in purchases of crude materials (45.7%) and fuels and lubricants (79.3%). As a result, eurozone recorded a €20.7 bn surplus in trade in goods with the rest of the world in July 2021, compared with +€26.8 bn in July 2020. Intra-euro area trade rose to €179.7 bn in July 2021, up by 16.8% compared with July 2020, the EU’s statistical office data revealed.

Eurozone Exports July 2021

Meanwhile, in the entire European Union (EU27) trade surplus stood at €15.7 billion in July. EU27 exports rose 10.3% to €186.1 billion, up by 10.3% compared with July 2020 (€168.7 bn). Imports were reported at €170.4 billion in the same month, up by 18.7% compared with July 2020 (€143.6 bn).
Intra-EU trade rose to €277.7 bn in July 2021, +15.8% compared with July 2020.

European Central Bank (ECB) Governing Council member Olli Rehn stated on Thursday that eurozone’s economic growth remains “robust” although it still requires policy support.
Finland’s central bank governor echoed other central bankers that inflation pressures are only temporary.

However, market participants continue to grapple over whether or not price pressures will prove transitory and risk assets are not out of the woods.

Over in the US, softer inflation data-which tempered expectations of imminent tapering of asset purchases by the Federal Reserve– is still throwing up some warning signs for both the economy and equity markets.

The U.S. Labor Department said on Tuesday (Sept. 14) its consumer price index (CPI) rose by 0.3% in August after climbing by 0.5% in July. Economists had expected consumer prices to increase by 0.4%
The highly anticipated report also showed a slowdown in the annual rate of consumer price growth, which dipped to 5.3% last month from 5.4% in July.

Despite CPI continuing to roll over last month, the producer price index (PPI) for final demand rose 0.7% in August after two straight monthly increases of 1.0%, creating a sizeable gap between the two measures. Final demand prices rose 8.3% from a year ago, the biggest increase on record going back to 2010. the Labor Department reported.

Looking ahead, the latest US retail sales and jobless claims reports highlight today’s economic calendar.