Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Growth plays pull European shares to new four-year high

Published 19/11/2019, 10:19
Updated 19/11/2019, 10:19
© Reuters. FILE PHOTO:  The German share price index DAX graph is pictured at the stock exchange in Frankfurt

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

By Sruthi Shankar and Shreyashi Sanyal

(Reuters) - Growth-dependent cyclical stocks drove European shares to a four-year high on Tuesday as a temporary reprieve for China's Huawei from U.S. sanctions encouraged bets that the world's largest economies could reach a trade truce.

After a hesitant start, the pan-European STOXX 600 index (STOXX) rose 0.5% to its highest level since July 2015, with cyclical sectors rallying. The index is now flirting with record highs hit in April 2015.

Automakers (SXAP) rebounded from their worst session in six weeks as data showed passenger car registrations in Europe rose to their highest since 2009 in October, driven by robust demand in Germany and France, and a rebound in demand for Volkswagen (DE:VOWG_p).

Volkswagen shares rose 2%, while trade-reliant miners (SXPP) and industrials (SXNP) gained between 0.9 and 1%.

The Trump administration on Monday issued a new 90-day extension allowing U.S. companies to continue doing business with China's Huawei Technologies Co Ltd.

The report soothed nerves after a report on Monday that said Beijing was pessimistic about the prospects of sealing a trade pact with Washington.

"The daily (gain) for stock markets shows investors are not necessarily buying the negative headlines," said Craig Erlam, senior market analyst at Oanda in London. "There seems to be a general feeling of when, rather if at all, a deal will be struck."

After a shaky few months for stock markets, worried by the prospect that the trade issues would drive the world economy into recession, third quarter corporate results over the last month have proved less bad than feared, fuelling a new rally.

Most sectors in the benchmark European index rose, with media stocks (SXMP) one outlier due to a 19.7% slide for Luxemburg-based satellite provider SES (PA:SESFd) after Federal Communications Commission chairman Ajit Pai said he backed a public rather than private auction of spectrum for next-generation 5G wireless networks.

Another macro-driven sector, travel & leisure (SXTP), gained 1%, powered by a 3.8% jump in shares of Britain's easyJet (L:EZJ) after it posted full-year profit towards the top end of expectations.

In corporate M&A, shares in Germany's TLG Immobilien (DE:TLGG) rose 2.4% after announcing an all-stock merger with fellow real estate firm Aroundtown SA (DE:AT1).

Halma Plc (L:HLMA) led gains on the FTSE 100 (FTSE) after the British safety equipment maker posted upbeat first-half results.

Intermediate Capital Group (L:ICP) jumped 7.7% to a record high as the alternative asset manager posted robust first-half results and a 50% increase in dividend.

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

London's domestically focused midcap index (FTMC) rose 1% after latest polling by ICM for Reuters showed Prime Minister Boris Johnson's Conservative Party had extended its lead over the opposition Labour Party in the past week.

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.