Europe: Stoxx 600 logs best day in a month; China-related stocks rise
EUROPE’S benchmark Stoxx 600 clocked its best one-day performance in a month on Monday in an overall market advance, boosted by China-exposed industrials on Beijing’s measures to aid its ailing stock market.
The pan-European Stoxx 600 closed 0.9 per cent higher, with technology stocks leading the gains with a 1.7 per cent advance, tracking early gains in Wall Street’s mega-cap stocks.
Traders widely stuck to their bets of a pause in US interest rate hikes in September even though Federal Reserve Chair Jerome Powell stressed the need for further hikes at the Jackson Hole symposium on Friday.
“A pause is most likely, but further hikes remain on the table particularly if the economy continues to perform as strongly as it has done,” said Kiran Ganesh, global head of investment communications in the UBS Chief Investment Office.
A report showed European Central Bank policymaker Robert Holzmann sees a case for another hike if there are no big surprises in inflation before then, while French Finance Minister Bruno Le Maire does not expect rates to go down in the coming months.
Euro zone banks added 1.6 per cent.
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Meanwhile, fresh evidence that sharply higher interest rates are putting a brake on credit creation and economic activity came in the form of a further slowdown in growth in lending to euro zone companies in July.
China-linked automakers and industrials added 0.8 per cent and 1.3 per cent, respectively, after the country’s finance ministry halved the stamp duty on stock trades “to invigorate the capital market and boost investor confidence.”
China-exposed luxury heavyweights LVMH, Kering and Hermes added over 1 per cent each.
“It will help improve sentiment in capital markets, but some of the structural challenges will require more substantial stimulus,” UBS’ Ganesh added, pointing to China’s weak consumer sentiment and property sector challenges.
With just a few days until August-end, the Stoxx 600 is set for its worst month this year, led by basic resources, weighed down by elevated bond yields and a worsening economic outlook for the euro zone and top export market China.
Among other major sectors, healthcare gained 0.6 per cent, boosted by a 1.2 per cent gain in Denmark’s Novo Nordisk .
A survey showed German exporters’ mood clouded further in August although there were signs of improvement in the beleaguered chemicals sector.
Meanwhile, bond yields across euro zone edged higher ahead of a slew of domestic and US economic data this week.
Markets in the United Kingdom were closed for a summer bank holiday. REUTERS
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