European shares post strong rebound as dollar, Wall Street rise

Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange. — Reuters pic
Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange. — Reuters pic

LONDON, Jan 4 — European shares recovered yesterday from a muted start to the year as a rising dollar boosted exporters and new records on Wall Street lifted spirits on a day devoted to the implementation of the new European MiFID II market rules.

Euro zone blue chips gained 0.6 per cent and the pan-European STOXX 600 index closed up 0.5 per cent while trading volumes were slightly up from the previous session despite new financial regulations kicking in.

A greenback rally triggered by upbeat US manufacturing and construction data ahead of the release of the Federal Reserve’s December policy meeting minutes helped blue chips in France and in Germany.

Frankfurt’s DAX and Paris’ CAC 40 both jumped 0.9 per cent.

“It’s a recovery session”, said Pierre Martin, a senior sales at Saxo Bank, noting that apart from the favourable currency effect, oil prices gave a boost to energy stocks and that other sectors, such as retail, industrials, healthcare or technology, had also supported indexes.

Shares in British retailer Next rose 6.7 per cent after it raised profit guidance on better than expected Christmas sales.

Next is the first major listed retailer to give an update on Christmas trading, but its optimistic update lifted other retailers such as Ocado, up 7.7 per cent or Primark owner Associated British Foods, up 2.1 per cent.

“As much as (Next’s) update is good news, the constant update-by-update tinkering of guidance and sharp reactions by the share price just goes to show how shareholders are at the mercy of UK consumer trends and whims,” said Mike van Dulken, head of research at Accendo Markets.

“The retail sector is a very tricky one.”

Europe’s retail index, one of the major underperformers of 2017, was up 0.7 per cent.

Europe’s energy sector built on the previous sessions’ gains with a 1.25 per cent advance, helped by firmer oil prices which rose to the highest in 2-1/2 years as unrest continued in Opec member Iran. — Reuters

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