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European equities posted modest gains on Monday, as Italian equities were dominated by the downgrade of Moody's Investors Service, which spared it on a note of debt junk. The second day of strong growth for Chinese equities was assistance, as local officials continued to make positive comments in support of the market.
What are the markets doing?
The Stoxx Europe 600
SXXP, + 0.29%
rose 0.1%, after a modest gain Friday, but an increase of 0.6% for the week.
The FTSE MIB Italy Index in Italy
I945, + 0.64%
increased by 0.6% to 19,197.74, reducing a stronger start earlier, while the German DAX 30
DAX, + 0.50%
up 0.4% to 11,610 and the CAC 40
PX1, + 0.28%
added 0.2% to 5,095.88. The FTSE 100 from the United Kingdom
UKX, + 0.63%
added 0.2% to 7,062.40. IBEX 35 from Spain
IBEX, + 0.32%
gained 0.5% to 8,937.90.
L & # 39; euro
EURUSD -0.1216%
was a firmer contact at $ 1,1534, from $ 1,1514 seen Friday night in New York. The pound
GBPUSD, -0.3291%
was stable at $ 1.3076 against $ 1.3066.
What is the driving force of the market?
Italian stocks and bonds rose after the downgrade of the Italian sovereign debt rating by Moody's to a notch at Baa3 on Friday night, to rank above the investment grade category, or junk . Moody's gave Italy a stable outlook, which means it was unlikely that the country's debt rating would be reduced again.
Markets have been worried for a few weeks about a budget battle between Italy and the European Union. An Italian government source told Reuters that the EU would reject the anti-establishment budget on Tuesday and ask the anti-establishment government to resume its work. The EU has postponed Italy's fiscal plan, which is forecasting a budget deficit of 2.4% for next year, compared to 1.8% currently.
Economy Minister Giovanni Tria and Prime Minister Giuseppe Conte have attempted, but failed this weekend, to reduce their deficit target, said the source. Italy has set a deadline for Monday to explain why its budget targets violate EU budget rules.
China's Shanghai-based composite index offers some support for equities as a whole.
SHCOMP, + 4.09%
posted their biggest gain in a day for more than two years, with officials continuing to comment on strengthening investors' confidence in financial markets.
What do the analysts say?
"Global equity speculators still have the opportunity to re-enter the scene thanks to strong corporate earnings. However, expectations of rising US interest rates, fears of global growth and geopolitical tensions pose risks to equity markets around the world, "said Lukman Otunuga, FXTM Research Analyst, in a note to customers.
"The general expectation is that Brussels rejects the budget on Tuesday. Although this has been planned for some time, the markets will want to see what is the next chapter in this unprecedented movement. Sanctions could do more harm than good to this delicate situation, "said Jasper Lawler, head of research at the London Capital Group, in a note.
Which stocks are active?
Fiat Chrysler Automotive NV
FCA, + 5.12%
FCAU, + 0.13%
The automaker has announced that it will sell its Magneti Marelli spare parts unit to KKR & Co.
KKR, -2.03%
Kalsei Corp., a Japanese company, owns 6.4 billion euros (6.1 billion dollars).
Ryanair Holdings PLC shares
RY4C, + 3.82%
jumped nearly 4%. The low-cost airline posted a 6% drop in net profit in the second quarter, but sales up. The company has focused on lowering the forecast for the full year announced three weeks ago.
Royal Philips NV
PHIA, -5.40%
The Dutch technology group announced a decline in net profit in the third quarter due to costs related to the separation of lighting activities.
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