European shares reach new four-year high
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 panEuropean STOXX 600 index 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 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. Volkswagen shares rose 2%, while trade-reliant miners and industrials 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.
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 one outlier due to a 19.7% slide for Luxemburg-based satellite provider SES 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, gained 1%, powered by a 3.8% jump in shares of Britain’s easyJet after it posted full-year profit towards the top end of expectations.
London’s domestically focused midcap index rose 1% after latest polling by ICM showed Prime Minister Boris Johnson’s Conservative Party had extended its lead over the opposition Labour Party in the past week.