European shares gain as recovery hopes boost cyclicals

The pan-European STOXX 600 index finished up 1.1 per cent, holding at highest level since March 9 even as trading activity was dulled by market holidays for Germany, Switzerland, Denmark and Norway.— Reuters pic
The pan-European STOXX 600 index finished up 1.1 per cent, holding at highest level since March 9 even as trading activity was dulled by market holidays for Germany, Switzerland, Denmark and Norway.— Reuters pic

NEW YORK, June 2 — European shares rose yesterday, as signs of recovery for the continent’s manufacturers prompted investors to continue snapping up cyclical stocks.

The pan-European STOXX 600 index finished up 1.1 per cent, holding at highest level since March 9 even as trading activity was dulled by market holidays for Germany, Switzerland, Denmark and Norway.

Growth-sensitive sectors beaten up by the coronavirus crisis led the gains, with travel & leisure jumping 3 per cent, while banks, miners and oil & gas companies rose between 2 per cent and 2.6 per cent.

While factory activity still contracted sharply across Europe in May, purchasing managers said April lows had passed as governments began to ease the tough coronavirus-led lockdown measures.

After crashing to its lowest reading in the survey’s nearly 22-year history in April, IHS Markit’s Manufacturing Purchasing Managers’ Index (PMI) for the euro zone rose to 39.4 from 33.4.

“The current beta rotation is helping the overall market through increased breadth,” analysts at J.P.Morgan Cazenove note.

But they cautioned the current move up in PMI will not end up building on itself “as the rebound is largely technical in nature.”

Investors also took relief as US President Donald Trump left the Phase One trade deal intact even as he began the process of ending special treatment for Hong Kong in response to China’s plans to impose new security legislation in the territory.

China has told state-owned firms to halt purchases of soybeans and pork from the United States, sources told Reuters.

Global markets kicked off June on a positive note, with the STOXX 600 recovering nearly 32 per cent since March lows as hopes of a Covid-19 vaccine, easing lockdowns and expectations of more stimulus from the European Central Bank, set to meet on Thursday, helped improve risk appetite.

MasMovil surged 23.8 per cent as buyout funds KKR, Cinven and Providence said they had made a €2.96 billion (RM14.2 billion) board-backed bid for the Spanish telecoms operator.

Italy’s Mediobanca jumped 8.1 per cent after billionaire Leonardo Del Vecchio confirmed he had asked for green light from the European Central Bank to increase his stake in the company.

Primark-owner Associated British Foods gained 8 per cent as it announced it was working to re-open all the fashion retailer’s 153 stores in England on June 15.

UK fashion brand Ted Baker reversed course to trade 4.1 per cent higher as it rolled out plans to raise £95 million (RM511.9 million) through a stock issue to help it ride out the Covid-19 crisis. — Reuters

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