Europe open: Stocks nudge higher but gains capped by geopolitical tensions
European stocks nudged higher in early trade, supported by a late recovery on Wall Street, although gains were limited amid heightened geopolitical tensions and ahead of a slew of US data.
At 0850 GMT, the benchmark Stoxx Europe 600 index was up 0.4%, France’s CAC 40 was 0.3% higher and Germany’s DAX was up 0.2%.
Turkey shot down a Russian warplane on the Syrian border on Tuesday claiming that it had entered Turkish airspace, although Russia rejected the claim.
Russian President Vladimir Putin called the incident “a stab in the back” and said it would have serious consequences for the countries’ relationship.
“While at this stage the danger of an open conflict between Russia and Turkey is very low, it might somewhat lessen the likelihood that Russia will step up cooperation in a major way to combat ISIS together with the US and France in the near future,” said Markus Huber, senior analyst at Peregrine & Black.
“Furthermore assuming that both sides remain calm, the sell-off seen yesterday should be reversed sooner rather than later which is often the case when market turmoil is caused by politics. Unlike in Europe there are plenty of economic data scheduled for release in the US today, with some data being released a day early due to tomorrow’s US Thanksgiving holiday.”
On the corporate front, Thomas Cook surged in London after posting its first profit in five years and expressing confidence over 2016.
Metro rallied after the German retailer lifted its 2015 dividend payout more than analysts were expecting.
Construction materials company LafargeHolcim built strong gains as it raised its dividend despite a drop in third-quarter sales.
On the macroeconomic calendar, investors will eye the release of US initial jobless claims, durable goods orders and personal income and spending at 1330 GMT. New home sales and University of Michigan sentiment are at 1500 GMT.
Huber said the main focus will be on durable goods and personal income and spending. “While both sets of data will not necessarily make a difference in regard that the Fed will hike rates in December they certainly will play a role when it comes to just how fast further hikes will follow in 2016.”
In London, the Chancellor’s Autumn Statement will be in focus later, with investors likely to keep an ear out for anything that might affect housebuilders or defence stocks in particular.