Europe open: Stocks rise after Monday's losses; German factory orders in focus
European stocks rose in early trade on Tuesday, having slumped in the previous session as worries about the energy crisis intensified.
At 0850 BST, the benchmark Stoxx Europe 600 index was up 0.6%, while Germany’s DAX and France’s CAC 40 were 0.7% and 0.4% firmer, respectively.
Victoria Scholar, head of investment at Interactive Investor, said: "European bourses have opened modestly higher after Monday’s slump with the FTSE 100 lagging behind the DAX and the CAC.
"There are reports that an EU gas price cap is being considered to offset the surge in gas prices after Russia closed access for Europe to the critical Nord Stream 1 pipeline. In the UK, Liz Truss gets set to be formally appointed prime minister today with markets concerned about the inflationary impact of her pledges to cut taxes and spend to tackle the energy crisis.
"US markets get set to play catch up today after Monday’s Labor Day holiday. After three weeks of declines, US futures are pointing to a higher open with the Nasdaq Composite on track to snap its first six-day losing streak since 2019."
On the macro front, the latest figures released by Destatis showed that German factory orders fell 1.1% on the month in July following a revised 0.3% in June, and versus expectations for a 0.2% drop.
On the year, orders were down 13.6% in July following a revised 9% decline in June. Analysts had been expecting a drop of 6.1%.
New orders in the domestic sector fell 4.5%, while eurozone orders were down 6.4% on the previous month. However, the volume of new orders from the non-euro area rose 6.5%, while total foreign orders grew 1.3%.
The producers of capital goods saw a 0.2% drop on the month in July. Intermediate goods makers saw new orders rise 1.5%.
Consumer goods orders declined 16.9%. Destatis said this was mainly due to a 23.6% slump in the volume of new orders for the manufacture of pharmaceutical products.
ING economist Carsten Brzeski said: "At the start of the year, German industrial order books were richly filled and provided decent anti-recession insurance. Since the start of the Ukraine war, however, this insurance has lessened by the month. Monthly industrial orders have been dropping since February and the latest release is, unfortunately, no exception.
"The only silver lining was the monthly increase in new orders from non-eurozone countries.
"Shrinking order books add to current recession fears. With surging energy prices and fading new orders, the outlook for the German industry is anything but rosy."
In equity markets, shares of Belgian automobile distribution company D'Ieteren surged after the release of well-received first-half results.
UK housebuilder Berkeley was also a high riser as it said it was on track to meet full-year profit guidance despite a "volatile" operating environment.