- Cypriot conservatives win by comfortable margin
- Goldman Sachs: Italian elections could easily go either way
- Banks deposited 166.4bn euros at ECB yesterday
FTSE Mibtel 30: 0.85%
Ibex 35: 0.78%
Stoxx 600: 0.13%
European stocks began the week encouraged by a solid victory for Cypriot conservatives over the weekend, as expected, which allowed investors to overlook weak Chinese manufacturing data out overnight.
Conservative leader Nicos Anastasiades was elected as the seventh president of Cyprus after winning 57.5% of the votes. Anastasiades won by the widest margin in 30 years.
Also helping sentiment were the constructive remarks from some Fed officials on Friday evening. Similarly, market commentary was highlighting how the Japanese government is likely to nominate an 'aggressive' candidate to the post of Governor of the Bank of Japan.
Be that as it may, a Goldman Sachs report indicating that the result of Italy's general and regional elections - the first exit polls of which are due at about 14:00 - could easily go 'either way' attracted a fair bit of attention over the weekend.
Interestingly, in the research note the bank indicates that: "On what is seen as the most likely result - a centre-left coalition government - the 10-yr yield spread to Germany could narrow by 50-75bp from current levels. But an outcome deemed almost as probable - a 'hung parliament' - could lead to market volatility while an agreement among parliamentary groups is sought."
A seventy-five basis point move in long-term bond yields is nothing short of an enormous move, explain analysts at Digital Look.
In a similar vein, analysts at RBS are of the opinion that: "we think the market is underpricing the risk of a hung parliament and overestimating the ability of a PD+Monti coalition to pass key reforms and continue supporting troubled Monte Paschi."
Neutral company news flow
Dutch parcel delivery business Post on Monday morning reported fourth-quarter earnings before interest and taxes of €219m, far ahead of consensus forecast.
German engineering giant Siemens is looking to accelerate its exit from its 50% stake in its telecom equipment joint venture with the Finnish phone maker Nokia, the Financial Times reports.
French media group Vivendi is likely to close a deal in the coming weeks to sell a stake in Brazilian telecoms unit GVT, according to press reports.
From a sector stand-point the best performance on the DJ Stoxx 600 was to be seen in the following industrial groups: Automobiles&Parts (1.74%), Technology (0.84%) and Chemicals (0.66%).
Italian trade deficit declines
Italy's non-EU trade deficit reached €2.3bn in January, after €5.2bn in the month before.
Spanish producer prices rose by 1.1% month-on-month in January, after a flat reading for December.
Other asset classes bounce back
The euro/dollar is now higher by 0.42% to the 1.3244 dollar
Front month Brent crude futures are now riisng by 0.774 dollars to the 114.98 dollar per barrel mark on the ICE.