European stocks rallied sharply on Monday, and most importantly, held on to their gains and closed on a high note, as investors indulged in some hectic buying almost across the board after recent setbacks.
Optimism about coronavirus vaccines and reports showing a significant improvement in Eurozone investor confidence in September, and a strong rise in U.K. house prices in the month of August outweighed concerns about U.S.-China tensions, data showing a sharp moderation in German industrial production and the continued impasse over Brexit negotiations.
Data showing a jump in Chinese exports and a bigger than expected increase in China’s trade surplus contributed as well to the firm trend in European markets.
Investors were also closely following news about coronavirus vaccines. According to reports Australia is likely to receive its first batches of a potential coronavirus vaccine early 2021. Vaccine developed by AstraZeneca and Oxford University, and the one developed by Australia’s CSL labs with the University of Queensland are the two vaccines named in the report.
Meanwhile, French pharma firm Sanofi has said that the vaccine developed by it with U.K.’s GlaxoSmithKline will cost less than 10 euros.
On the Brexit front, the U.K. is reportedly planning a legislation that will override the Brexit withdrawal agreement on Northern Ireland. The eighth round of Brexit negotiations will commence this week.
The pan European Stoxx 600 climbed 1.67%. The U.K.’s FTSE 100 gained 2.39%, Germany’s DAX surged up 2.01% and France’s CAC 40 ended up 1.79%, while Switzerland’s SMI climbed 1.43%.
Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Iceland, Netherlands, Norway, Poland, Portugal, Spain, Sweden and Turkey closed with sharp to moderate gains.
Greece, Ireland and Russia ended modestly higher.
In the U.K. market, Scottish Mortgage, Ashtead Group, Experian, GlaxoSmithKline, AstraZeneca, Hikma Pharmaceutical, BP, Meggitt, Johnson Matthey, National Grid, Rolls-Royce Holdings, 3i Group, Standard Chartered and Tui moved up 3 to 5.5%.
Royal Bank, Barratt Developments, Glencore, Rightmove, Sage Group, Royal Dutch Shell, Diageo, Coca-Cola, Melrose, Burberry Group and Vodafone also rose sharply.
In Germany, Volkswagen gained nearly 5% and Daimler moved up 4.25% and BMW closed 2.1% up.
Infineon Technologies, Vonovia, SAP, RWE, Linde, Bayer, BASF, Allianz, E.ON, Merck, Munich RE and Deutsche Telekom gained 1.5 to 3%, while Lufthansa, Wirecard and Deutsche Bank lost 0.8 to 1.3%.
In the French market, Airbus Group shares surged up 5.75%. Safran, WorldLine, Engie, Renault, Saint Gobain, Dassault Systemes, Bouygues, Vinci, Sanofi, Peugeot, Sodexo, Veolia and STMicroElectronics gained 2 to 4%.
On the other hand, Publicis Groupe, Societe Generale, Unibail Rodamco and Technip closed with sharp to moderate losses.
On the economic front, data from Destatis revealed Germany’s industrial production growth moderated sharply in July, growing 1.2% on month. Economists had expected industrial production to see a 4.7% increase, after a 9.3% growth in June. On a yearly basis, industrial output fell 10%, following June’s 11.4% decrease.
UK house prices increased at the fastest pace since late 2016 driven by the pent-up demand and stamp duty reduction, data from the Lloyds Bank subsidiary Halifax and IHS Markit showed.
House prices increased 5.2% on a yearly basis in three months to August, which was the strongest since late 2016. Prices had advanced 3.8% in three months to July. On a monthly basis, house price growth slowed marginally to 1.6% in August from 1.7% in July.
Eurozone investor confidence improved to the highest since February as the economy continued to recover from the coronavirus induced slump, survey data from Sentix showed.
The eurozone investor confidence index rose to -8.0 in September from -13.4 in August. This was the fifth successive increase and reached its highest level since February. The current situation index came in at -33.0 versus -41.3 in the previous month. At the same time, the expectations indicator climbed marginally to 20.8 from 19.3.
In Germany, the investor confidence index rose to -0.1 in September from -4.5 in August. This was also the best value since February.
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