Sino-U.S. deal optimism drives European shares to 21-month upsurge
European shares reached 21-month high last Monday, the highest record since January 2018. Such was enforced by gains from carmakers and miners as United States and China pose hopes for a trade deal agreement.
S&P 500 .SPX index on Wall Street tallied reached record high following US President Donald Trump’s announcement of signing a part of trade deal with China. Though Trump disclosed his willingness, the signing schedule was not mentioned.
Among the major regional indexes, export-dependent Frankfurt-listed shares .GDAXI hit 0.4% while the Pan-European STOXX 600 index acquired 0.3%. European-based .SXAP soared at 1.8% closing to six-month high as commodity-linked stocks .SXPP jumped at 1.5%
“If the Phase 1 (of the U.S.-China trade deal) has been agreed upon, it’s a massive step forward - that is a strong and real signal to investors that progress is being made,” said Craig Erlam, senior market analyst, UK & EMEA at OANDA.
The most recent progress on Sino-US trade emerged as investors put efforts on gauging its implication on European corporate earnings. After three consecutive weeks of reports, firms have managed to project decent beats to their gains prediction. However, analysts stated that the bar was put on a lower level.
“There is probably more of an upside to price to what we’re seeing in terms earnings and it’s not been as bad as feared a few weeks ago,” Erlam said.
Despite optimism, utilities sector .SX6P, food and beverages .SX3P, and telecoms .SXKP suffered ranging from 0.5% and 0.3% as risks arise from investors’ decision to move back to growth sectors. Such is seen as an answer to a more positive political state.
This includes European Union’s three-month Brexit delay as UK Prime Minister Boris Johnson pushes for election.
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