London View - Afternoon

European stocks with gains Tuesday

European stocks added gains Tuesday, moving out of the negative to extend six-year highs as US economic data in the shape of strong durable goods orders offered stronger direction.

The euro remains under pressure at $1.3643, weighed by comments from ECB president Mario Draghi on Monday suggesting that the low-inflation in the euro area is enough to spark stimulus response by the central bank at next month’s policy meeting. Portuguese bonds rallied on the expectation that the ECB is preparing to introduce further stimulus measures, with the country’s 10-year yield falling to 3.62%. Other peripheral bonds also gained, with Spanish and Italian bonds showing a decent performance.

The reaction in European markets to the EU election results has been relatively muted; eurosceptic and anti-austerity parties made significant gains in some countries, such as France and the UK, while pro-EU ruling parties were the main beneficiaries in countries like Germany, Italy and Spain. In the UK, the success of the anti-European Union UK Independence Party weighed on the UK pound which fell to a 17-month against the euro last week. The pound also was weighed by data from the BBA which showed UK mortgage approvals fell 6.4% to 42,173 in April.

In the Ukraine, President-elect Petro Poroshenko has pledged to rein in separatists in the east of the country, a move that may not go down too well with Russia, which has agreed to talks with Ukraine’s President-elect.  

Over to US markets, stocks are moving higher Tuesday with durable-goods orders in up 0.8% in April after a revised 3.6% increase in March. US housing data compiled by S&P/Case-Shiller also showed a healthy reading of the US housing market. Eyes now shift to the US consumer confidence report due shortly. Much of the focus this week will be on US Q1 GDP data, due Thursday.