European Shares Rise Following Dovish Remarks from ECB Officials

European stock markets moved broadly higher on Monday led by real estate and food companies. U.S. jobs data on Friday helped buoy U.S. equities and investors remained positive in Asia Monday. Comments from BoJ Governor Kuroda, who reiterated that policy could be adjusted as needed, coupled with remarks from ECB’s Villeroy and Praet, who suggested that the ECB will not tweak its guidance at the July meeting, underpinned sentiment as markets prepare for the second quarter earnings season. The Nikkei closed up 0.76%, and the DAX is higher, while the FTSE 100 is lagging.

Eurozone Investment Sentiment Declined in July

Eurozone Sentix Investor Confidence falls back in July, with the total reading declining to 28.3 from 28.4 in the previous month. The indicator for the current situation still improved to 37.3 from 36.0, but the expectations index fell back to 19.8 from 21.0, the first decline since February.

The ECB seen steady over the summer. Comments from Bank of France governor Villeroy over the weekend seem to confirm that the central bank will refrain from policy and guidance changes at the July meeting and wait until September when the next set of forecasts are due to decide on whether to tweak its stimulus settings. At the same time ECB Chief Economist Praet said in a newspaper article that “we still need a long period of accommodative policy”, in what looks like a fresh attempt to calm the nerves of investors, after some hawkish comments saw Eurozone yields rising last week.

Germany posted a trade surplus of EUR 20.3 billion in May, slightly higher than the EUR 19.7 billion in the previous month. Exports rose 1.4% month over month on a seasonally adjusted basis, up from 0.9% month over month in April, while import growth stagnated at 1.2% month over month. The three months accumulated figure eased slightly, is now below the total for Q1, which suggests trade is not making much of a contribution for Q2 GDP. Indeed, accumulated data for the first five months of the year show the total current account surplus falling back to EUR 98.0 billion from EUR 110.3 billion last year, while the trade surplus narrowed to EUR 100.1 billion from EUR 104.8 billion in the corresponding period 2016.