Europe midday: Stocks push higher as oil advances

European stocks pushed higher on Monday as disappointing Chinese trade data was outweighed by rising oil prices and the scaling back of Federal Reserve rate hike expectations.

At midday, the benchmark Stoxx Europe 600 index was up 1.3%, Germany’s DAX was 1.8% higher and France’s CAC 40 was 1.2% firmer.

At the same time, oil prices were in the black as wildfires continued to rage in the Canadian province of Alberta. Strong Chinese crude import data also helped to underpin the tone for oil after data showed imports rose 7.6% in April on the year.

Investors also mulled news at the weekend that Saudi Arabia’s veteran oil minister Ali al-Naimi will be replaced by Saudi Aramco chief executive Khalid al-Falih.

West Texas Intermediate was up 2% to $45.56 a barrel and Brent crude was 1.5% higher at $46.05.

“Despite relatively poor Chinese trade data, European equities have started the week higher amid expectation that Friday's weak US employment numbers will force the Federal Reserve to delay any prospective rate rises,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

“This reaction is a return to the 'bad news is good news' perspective that dominated market sentiment previously, but the key question is whether lower rates for longer is a catalyst for driving equities higher, or simply an excuse for markets to try and justify current levels. Without sustained global growth and profitability, the danger is that markets will continue to drift lower, as seen over the past two weeks.”

Data out of China over the weekend showed imports and exports fell more than expected in April. Exports dropped 1.8% on the year versus expectations for a flat reading, while imports tumbled 10.9% from the previous year, which was a much steeper fall than the 4% expected.

Corporate news was thin on the ground.

Chemicals distributor Brenntag slumped after posting a 27% decline in first-quarter net profit that missed analysts’ estimates.

In London, security firm G4S rallied after saying it has made a positive start to the year despite a challenging backdrop, with no new impairments. Back in March, shares in the company tumbled after it posted a fall in full-year profit and revenue on the back of restructuring costs and write-downs on onerous contracts relating to asylum seekers.

Also on Monday, investors will eye a Eurogroup meeting of finance ministers later in the day, where Greece’s progress on reforms will be a top of discussion.

“The thorniest issue appears to be the contingency measures worth 2% of GDP requested by the IMF,” said UniCredit.

On Sunday, the Greek parliament voted to overhaul pensions and lift taxes to help unlock bailout funds.

On the data front, a report by Sentix showed Eurozone investor confidence rose more than expected in May but remained subdued.

The investor sentiment index climbed to 6.2 in May from 5.7 in April, beating forecasts of 6.0. However, it remains well below levels recorded last year.

The index had reached double digits in February 2015 after the European Central Bank announced its quantitative easing programme, but returned to single digits in January of this year amid concerns about the health of the eurozone’s economy and prolonged low inflation.