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Europe: Shares rally as trade optimism outweighs political concerns


[BENGALURU] European shares saw broad-based gains on Thursday, rallying after encouraging comments from China on trade with the United States came as a welcome relief amid growth worries and political turmoil.

The optimism seemed to outweigh concerns about impeachment surrounding US President Donald Trump which pushed Wall Street into the red. London's blue-chip index jumped 0.8 per cent despite heavy falls in some stocks.

The pan-European Stoxx 600 index closed up 0.6 per cent, after weak purchasing managers' surveys, worries about Britain's exit from the European Union and the impeachment probe into Mr Trump had pressured the index over the last three sessions.

"What we see is just market expectations, it is purely micro management of the market," said Stephane Barbier de la Serre, Macro Strategist, Makor Capital Markets SA.

Market voices on:

"They sold yesterday and they are buying back. It is very much algorithm trading."

Trade optimism was spurred by Beijing saying it's in close communication with Washington and preparing to make progress at trade talks in October. This came after Trump's overnight comment that a Sino-US trade deal could happen sooner than expected.

Although investors are keeping a close watch on US-China trade moves, they are starting to price in the possibility of trade negotiations continuing for a long time, and are nearing the point of growing immune to developments on this front, analysts say.

"If none of the external shocks hitting global manufacturing and trade get much worse than it is already, households and companies are likely to get used to the noise and risks over time," wrote Holger Schmieding, chief economist at Berenberg.

Healthcare stocks were among the biggest gainers on the day after rating agency Moody's said drugmakers with a major presence in China would benefit from the country's growing demand for drugs.

AstraZeneca Plc, Novartis and Roche Holding AG rose between 0.7 per cent and 1.5 per cent.

Belgian supermarket chain Colruyt jumped 7.6 per cent after a better than expected net income forecast.

Some London-listed stocks saw steep declines after issuing profit warnings. Education company Pearson and tobacco company Imperial Brands both dropped more than 12 per cent, while cruise operator Carnival Corp gave up 7.2 per cent.

Dutch bank ABN Amro was also among the biggest drags on the pan-region index, hit by a money laundering investigation.