European stocks lifted as Chinese GDP lifts commodities

A stronger-than-expected reading for second quarter Chinese GDP was enough to lift the price of metals and heighten demand for key mining and energy stocks on Wednesday, lifting European indices by 0.2%.

Indices have been on a bit of a roller coaster ride for the last 48 hours as investors reacted with sharp sensitivity to the jump in bond yields of sovereign indebted nations such as Spain and Italy on fears that contagion was worsening. The successful Italian short-term 12-month bond auction helped to spark a bit of a revival in the afternoon session yesterday, and that has continued today to some degree thanks to Chinese GDP figures.

Chinese GDP rose 9.5% for the second quarter, a somewhat less sharp slowdown than the market had feared. Markets had expected a figure of 9.4%. As such, the stronger-than-expected reading is helping to douse the flames of concern over the potential for a sharp slowdown in Chinese activity after the recent interest rate hikes and efforts of the Chinese authorities to cool excessive inflation.

The result of Chinese GDP data this morning has been to increase near-term demand for copper, which has rallied nearly 1% today, and this has had a positive impact on the share prices of heavyweight mining stocks such as Kazakhmys and Antofagasta, which gained over 3% in early trade.

Fresnillo, the silver miner, is the standout performer on the UK index however, with shares rallying some 5% straight to the top of the FTSE leader board after a two-day sharp rally in the price of silver. News that the firm plans to double output at its Mecixan Saucito mine in the next four years in an effort to make it the world’s biggest overall silver producer has also given shareholders a lift.

Marks and Spencer’s results lack sparkResults from Marks and Spencer’s lacked sparks today by announcing a 1.7% rise in sales excluding VAT, which was largely in line with market forecasts. However, concerns remain over demand for non-food items, where sales were flat for the 13-week period ending July 2 has weighed on sentiment. There had been a rally in M&S’s share prices yesterday in the run up to today’s earnings and investors have been quick to cash in their gains with earnings lacking sparks.

Burberry shares rally as results beat consensusBurberry shares rallied near 4% on the day after the luxury goods retailer reported a better-than-expected jump in revenues. Revenues jumped by 34% to £367 million, when the market was looking for revenues of £350 million. The double-digit rise in store sales of 15% is also particularly pleasing, with half-year wholesale revenues expected to be higher by between 5%-9%. In short, it has been a pleasing set of earnings which shareholders have cheered, buying into the company’s share prices.