Chinese economic stimulus boosts European stocks
European shares rose on Monday to near six-week highs, led by mining and luxury goods stocks after signs of fresh stimulus to support China’s slowing economy.
The pan-European STOXX 600 index was up 0.1% by 1000 GMT, on track for an eighth straight session of gains.
China will adopt an “appropriately easy” monetary policy next year as part of moves to support economic growth, state media reported, citing a Politburo meeting, marking the first such shift towards easing since 2010.
European miners with exposure to China rose 2.8%, while luxury goods stocks LVMH and Richemont added more than 2% each. Germany’s DAX index fell 0.1%, having touched a record high earlier in the session.
“It’s rhetoric, not action, but from an economic perspective this rhetoric looks very positive,” said Lewis Grant, senior portfolio manager for global equities at Federated Hermes.
Meanwhile, energy stocks rose 1.2%, along with oil prices after the fall of Syrian President Bashar al-Assad sparked fears of a fresh wave of instability in a region already gripped by war.
The European aerospace and defence index fell 1% to a one-week low.
“It seems like there’s another reason to be pessimistic, but markets are actually optimistic,” said Grant of Federated Hermes. “One element of that is December, but in the new year investors may find themselves with a bit of a headache when they face reality.”
Traders are looking ahead to US inflation data on Wednesday for a gauge of the pace of potential rate cuts by the Federal Reserve, while the European Central Bank is widely expected to cut rates by 25 basis points on Thursday.
Among individual stocks, Banco BPM was flat, while UniCredit fell 0.9% after Credit Agricole (OTC:CRARY) said it was willing to increase its stake in Banco BPM.
German meal kit maker HelloFresh fell 6.7% as traders cited a report of a U.S. investigation into child labor allegations.
CompuGroup Medical (TASE:PMCN) surged 32% after the German healthcare software provider said it was in advanced talks to be acquired by CVC Capital Partners (WA:CPAP) for 22 euros ($23.24) per share.