European shares closed a touch higher in thin trade yesterday, led by luxury brand Burberry after a robust update, while weak China trade data weighed on mining stocks.
Miners decline on weak China trade data
The FTSEurofirst 300 closed up 0.1 per cent at 1,190.02, led by a 4.8 per cent advance from Burberry, which maintained its full-year guidance and announced an 18 per cent rise in first-quarter underlying retail revenue.
Basic resources stocks, off 0.9 per cent, limited the index’s gains, after top metals consumer China said exports unexpectedly fell in June and the outlook for trade was “grim”.
Light volume, at just 74 per cent of the 90-day daily average, reflected investors’ reluctance to get too involved in the market as they waited for a fresh steer on the US Federal Reserve’s monetary policy plans.
Fed Chairman Ben Bernanke is set to speak on Wednesday after the latest Federal Open Market Committee minutes.
Analysts said a recent bounce in European equities showed the market was getting more used to the prospect of diminished US stimulus.
The FTSEurofirst 300 has risen some seven per cent from a trough towards the end of June, more than recouping losses fuelled by Bernanke’s confirmation that the Fed would begin winding down its stimulus spend later this year.
“Markets are essentially looking for a bit of colour as to the timing (of withdrawal) but I don’t think they’re going to get that,” Michael Hewson, analyst at CMC Markets, said.
“They’ve got to get used to the fact that we are going to get some form of tapering at some point, maybe as early as September, maybe December.”
Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, added: “The only surprise you could have is a positive one because everyone’s expecting tapering, so if the minutes were a little bit more dovish than markets expected it could even be a positive.”
The Euro STOXX 50 shed 0.2 per cent to 2,659.71 points, albeit with closes above its 200-day moving average, currently at 2,636 points, for the past three sessions being interpreted by some technical analysts as a positive.
Barclays Capital technical analyst Lynnden Branigan said that failing any surprises from the Fed, while the 200-day moving average holds, he expects a push higher in range over the next two weeks stretching up to 2,718, the June 17 high.