Sun, Jul 03, 2016 - Page 14 News List

European markets recover more than half of losses

Bloomberg

European stocks strengthened a rally that has recouped more than half the losses from the aftermath of the Brexit vote.

The STOXX Europe 600 Index added 0.7 percent at the close, capping its biggest weekly gain in a month.

The UK’s FTSE 100 Index also advanced, completing its best four-day jump since 2008 amid a weakening pound and rising commodities.

After a two-day selloff sparked by Britain’s shock vote to quit the EU, the STOXX 600 has recovered 7.6 percent, the biggest surge since February, as central banks stepped up to reassure investors they were ready to act.

Lenders reversed a drop after the Bank of England was said to be planning a cut in capital requirements as early as next week.

Standard Chartered PLC and UBS Group AG rose more than 2 percent.

“Policymakers have been very level-headed,” said Francois Savary, who helps oversee the equivalent of US$2.6 billion as chief investment officer at Prime Partners in Geneva, Switzerland.

“It’s all about the relief that central banks have intervened, but this rebound is not part of a new trend. There are still political uncertainties and let’s not forget that we’re in a low-growth environment where corporate profits are struggling,” Savary added.

Equities extended gains after British Secretary of State for Justice Michael Gove, in the fray to become the country’s next prime minister, said he does not expect the formal mechanism to leave the EU to be triggered this year.

Theresa May, the bookmakers’ favorite for the position, has said the same.

The central bank could loosen policy within months, Bank of England Governor Mark Carney said on Friday, while the European Central Bank was said to be considering loosening the rules for its bond purchases.

The STOXX 600 trimmed its first monthly loss in four and is up 3.2 percent for the week.

Stocks were volatile in the run-up to and the aftermath of the Brexit vote, with trading volume reaching records. A gauge of eurozone equity swings surged to a 10-month high before the referendum, before subsiding to a three-week low.

The VSTOXX Index fell for a fifth session yesterday.

Eurozone manufacturing last month grew faster than initially estimated, a report with results collected prior to the referendum showed yesterday, while another release showed unemployment in the region fell to an almost five-year low.

All 19 industry groups on the STOXX 600 advanced, with Volkswagen AG and PSA Peugeot Citroen leading carmakers to the best performance.

Among shares active on corporate news, Temenos Group AG climbed 3.1 percent after the Swiss software maker said Standard Chartered would use its wealth management program in more than 30 markets.

Telefonica Deutschland Holding AG slid 2.5 percent after Credit Suisse Group AG downgraded the shares to “neutral,” citing increased competition in Germany.

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