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European Equity Benchmarks Close Higher as Health Care, Oil Stocks Lift Markets

The broad-based major European indices closed higher in Tuesday trading as health care and oil stocks helped boost the markets in the first day of trading after the long Easter weekend.

In economic news, the government deficit and debt of both the euro area (EA19) and the EU28 decreased in relative terms in 2018 compared with 2017, according to Eurostat, the statistical office of the European Union. In the euro area, the government deficit to GDP ratio fell to 0.5% in 2018 from 1.0% in 2017, and in the EU28 it dropped to 0.6% from 1.0%. In the euro area the government debt to GDP ratio declined to 85.1% at the end of 2018, from 87.1% at the end of 2017, and in the EU28 it fell to 80.0% from 81.7% the previous year.

A government surplus was registered in Luxembourg (+2.4%), Bulgaria and Malta (both +2.0%), Germany (+1.7%), the Netherlands (+1.5%), Greece (+1.1%), Czechia and Sweden (both +0.9%), Lithuania and Slovenia (both +0.7%), Denmark (+0.5%), Croatia (+0.2%) and Austria (+0.1%). A government balance was registered in Ireland, while Romania and Cypruss had deficits equal to or higher than 3% of GDP at -3.0% and -4.8% respectively.

At the end of 2018, the lowest ratios of government debt to GDP were recorded in Estonia (8.4%), Luxembourg (21.4%), Bulgaria (22.6%), Czechia (32.7%), Denmark (34.1%) and Lithuania (34.2%). There were 14 member state governments with debt ratios higher than 60% of GDP, with the highest registered in Greece (181.1%), Italy (132.2%), Portugal (121.5%), Cyprus (102.5%), Belgium (102.0%), France (98.4%) and Spain (97.1%).

Meanwhile, the value of trade (imports plus exports) of agricultural goods between the European Union (EU) and the rest of the world was EUR275 billion ($308.4 billion) in 2018, equivalent to 7.0% of the total extra EU international trade in goods. It was almost evenly divided between exports at EUR137 billion and imports at EUR138 billion, which resulted in a small trade deficit. Between 2002 and 2018, trade measured in value more than doubled, equivalent to an average annual growth of 5.0%, with exports growing faster (5.8%) than imports (4.3%).

In the UK, the seasonally adjusted IHS Markit Household Finance Index (HFI), which measures households' overall perceptions of financial wellbeing, rose to a three-month high of 44.0 in April, from 43.4 during March, indicating a lesser degree of pessimism among UK households. The increase was supported by stronger growth in earnings from employment, while job security perceptions also stabilized amid an increase in workplace activity.

Data showed that the rate of growth was the strongest seen since data collection began in 2009. IHS Markit said overall job security perceptions broadly stabilized during April, however the sector split revealed some diverging trends, with those working in retail and manufacturing reporting greater negativity toward job security compared with March.

"The bright spot for the UK in recent months has been the resilience of its labor market, and latest survey data from households revealed that some of the positivity seen in the hard numbers has filtered through to sentiment and is supporting household finances," said Joe Hayes, an economist at IHS Markit. "Income from employment grew at its fastest pace since the survey started in 2009, corroborating with the pick-up seen in official wages data. Households also moderated their concerns over job security, supporting a more relaxed approach to overall spending. Nevertheless, appetite for major purchases continued to falter, suggesting that households are still holding back on those big-ticket purchases."

And in Italy, notary agreements regarding sales of real estate units and any other kind of exchange of properties and appurtenances in return for payment (230,258) increased 4.7% in Q4 of 2018, compared with the previous quarter. The increase concerned all the geographical areas both for the residential sector, and for the economic sector.

In equities, health care related stocks helped lift the FTSE in London as health care company NMC Health and Hikma Pharmaceuticals climbed 4.1% and 2.8% respectively, while medical equipment maker Smith & Nephew, and GlaxoSmithKline each closed 2.2% higher. Oil companies BP and Royal Dutch Shell were up 2.6% and 2.2%, while automotive marketplace Auto Trader Group, and educational publishing company Pearson increased 3.1% and 2.8% respectively.

In Frankfurt, health care stocks also led the DAX higher as health care company Fresenius, and pharmaceutical firm Merck rose 2.9% and 2.4% respectively, while kidney dialysis company Fresenius Medical Care, and pharmaceutical company Bayer climbed 1.6% and 1.4%. Internet company Wirecard was up 2.8%, while software firm SAP, and real estate company Vonovia gained 1.4% and 1%.

And in Paris, oilfield services company TechnipFMC, and luxury goods company Kering led the CAC higher, rising 4.3% and 4.2% respectively, followed by hotel operator Accor, and plane maker Airbus, which climbed 2.5% and 2.1%. Oil and gas company Total, and pharmaceutical firm Sanofi each closed 1.8% higher, while aerospace and defense company Safran, and eyewear company EssilorLuxottica were up 1.2% and 1.1%.

The FTSE rose 0.85%, the DAX increased 0.11%, and the CAC-40 gained 0.20%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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