European Stocks Rise to 3-Month High on Stimulus, Reopening Bets
(Bloomberg) — European stocks rose to their highest level in almost three months, buoyed by optimism about economies reopening and stimulus measures.
The Stoxx Europe 600 Index added 1.6% at the close, its sixth advance in seven days. The DAX Index jumped 3.8% as German markets reopened after a holiday and as Chancellor Angela Merkel seeks to broker a compromise on a second stimulus package. Deutsche Lufthansa AG rose 3.4% after the airline overcame most of the barriers to receiving a $ 10 billion government bailout.
European equities have retraced more than half the decline from a selloff that began in February. Easing lockdowns and unprecedented stimulus measures are boosting sentiment, sending the Stoxx 600 toward its 100-day moving average for the first time since late February. Still, escalating U.S.-China tensions have tempered some gains recently.
“So far, investors remain focused on global business reopening, the fact that the number of new Covid cases remains stable as economies restart operating and of course, the massive fiscal and monetary support from central banks and governments,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “The positive sentiment outweighs even a faltering phase-one deal between Beijing and Washington.”
France’s CAC 40 Index climbed 2% even after the country’s finance minister said its economy will suffer a deeper recession than previously expected.
Cyclicals were top performers on Tuesday, led by autos. Carmakers rallied after May sales figures from three of region’s biggest auto markets indicated the demand drop due to the Covid-19 pandemic is slowing.
Tech shares rose 1.5%, erasing their 2020 losses. Along with health-care shares — the only other sector in the green this year — they have been the biggest beneficiaries from the Covid-19 fallout.
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