European stock markets opened higher on Tuesday, building upon the unusually strong gains seen on Monday in spite of the reported contraction in the German economy.
Most major markets were up by 1% at the opening bell before fading later in the day. By mid-afternoon the DAX had risen by 0.6%, the CAC 40 by 1% and the IBEX 35 by 1.1%.
The FTSE 100 was a notable exception to the rule, having slipped 0.2% — likely influenced by UBS having downgraded its forecast for UK GDP in 2020 earlier in the day. The FTSE MIB, however, gained 0.8%.
It is likely that investor sentiment was boosted by the outcome of a phone call between US Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He, in which steps were taken towards a Phase 1 trade deal.
“Both sides see progress and are committed to taking the steps necessary to ensure the success of the agreement,” the US Trade Representative’s office said in a statement on the call.
News of the call had a definite impact on Asian currencies and global stocks, as IKON Commodities’ director of advisory services Ole House remarked that the positive US-China talks were “bullish for most commodities”.
The day’s stock market gains came in spite of new data released in Germany confirming that its economy contracted by 9.7% in Q2 which, while steep, largely beat analysts’ expectations. Dutch bank ING hailed the release as evidence that Germany was past the peak of the COVID-19 pandemic, calling the data a “final glance in the rearview mirror”.