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Europe open: Stocks higher as eurozone GDP beats expectations

07/12/2017 10:24

(ShareCast News) - European stocks were higher on Thursday morning as the latest reading on eurozone gross domestic product eclipsed the market's expectations but German industrial data was far worse than the expected. The Stoxx 600 benchmark was rose to 398 in early trading, with Germany's Dax and France's CAC both up around 0.6%. Euro area GDP growth for the third quarter was revised up to 2.6% year-on-year, according to the third reading, versus expectations it would remain at 2.5%. Quarter-on-quarter expansion of 0.6% was driven mainly by domestic demand, with timelier evidence mostly suggesting the European economy has performed well so far in the fourth quarter, setting it up for a strong 2018. However, German industrial production data for October showed a drop of 1.4% month-on-month, far worse than the expected 1% gain.

Year-on year, this saw growth slow to 2.7% from 4.1% the previous month, while the consensus had been for an improvement to 4.3%. The European Central Bank will be cautious but content with the latest eurozone GDP reading for the eurozone this morning, said Anthony Kurukgy, senior sales trader at Foenix Partners. "President Draghi will point to a continuation of steady growth within the eurozone over the last 12 months with record lows in unemployment and 17 year highs on consumer confidence.

Just when political pressures started to ease within the eurozone, the largest economy within the single state trading bloc may be on a brink of monumental change as German Chancellor Merkel still struggles to form a collation government. "With coincidence between both growth in both the eurozone and Germany under no debate, ECB President Draghi will be hoping that the new government that the German electorate are looking for, won't come at a cost to future growth in the eurozone."

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