🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

China rally triggers gains in European cyclical stocks

Published 07/06/2020, 04:57 AM
Updated 07/06/2020, 05:00 AM
© Reuters.

By Sruthi Shankar

(Reuters) - European shares headed towards a one-month high on Monday, with a rally in China's markets setting an upbeat tone as investors banked on the world's second biggest economy to lead a recovery from the coronavirus-induced slump.

The pan-European STOXX 600 (STOXX) climbed 1.6%, as stocks exposed to China, including carmakers (SXAP), industrials (SXNP), energy firms (SXEP) and luxury goods makers, gained strongly.

The German DAX (GDAXI), London's FTSE 100 (FTSE) and France's CAC 40 (FCHI) all rose about 2%.

China's blue-chip index (CSI300) jumped over 5%, as investors stocked up on cheap funding to invest in an economy that analysts predict will recover faster and better than other major countries battling new waves of infections. [.SS]

"They (China) were the first to get hit by the virus, and that's the sort of timeline that other economies in the world can expect for a bounce back," said Michael Baker, an analyst at ETX Capital in London.

"The only concern is the United States. That's a spanner in the works."

In the first four days of July alone, 15 states have reported record increases in new cases of COVID-19, which has infected nearly 3 million Americans and killed about 130,000, according to a Reuters tally.

Optimism from Asia spilled over to European trading session, with HSBC (L:HSBA), Banco Santander (MC:SAN), BNP Paribas (PA:BNPP) offering the biggest boost to the STOXX 600.

Europe's battered banking index (SX7P) jumped 4%, touching its highest level since June 10.

UK homebuilders Persimmon (L:PSN), Taylor Wimpey (L:TW) and Barratt Developments (L:BDEV) were the top gainers, surging about 6% after reports that British Finance Minister Rishi Sunak planned to raise a property tax threshold, among other steps to reduce the economic toll of the health crisis. (L)

Barratt said it was starting the new financial year with "cautious optimism" as its forward order book improved.

Sonova (S:SOON), the world's biggest hearing aid maker, rose 5.0% after saying it would close some stores and cut jobs as it expects first-half results to only partially recover from the pandemic hit.

Nordic banking group Nordea (HE:NDAFI) rose 3.0% after it agreed to buy the occupational and individual pension portfolios from Frende Livsforsikring AS.

© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt

Swiss speciality chemicals group Clariant (S:CLN) slumped 13.6% to the bottom of STOXX 600 on trading ex-dividend.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.