European banking stocks and Italian shares yesterday jumped after new Italian Minister of Economy and Finances Giovanni Triac promised to keep the country in the euro, dissipating investors’ fears of a eurozone break-up and boosting sentiment after the fraught G7 Leaders’ Summit.
Eurozone banks rose 1.5 percent, helping the pan-European STOXX 600 gain 0.4 percent, while Italy’s FTSE MIB jumped 2 percent and Spain’s IBEX 0.9 percent.
Italian bank stocks climbed 2.1 percent as bond yields fell with relieved investors buying back into Italian assets after Tria on Sunday vowed to stay in the euro and cut debt levels.
Italian banks Unicredit SPA and Intesa Sanpaolo SPA led the European index, up 4.5 and 4.2 percent. Italgas SPA and Poste Italiane SPA, which had been weighed down by political uncertainty, also made strong gains.
Swiss voters’ rejection of a campaign to radically alter the banking system also helped boost sentiment. Switzerland’s stock index was up 1.1 percent with banks Credit Suisse Group SA and UBS Group AG leading gains.
Swiss consumer goods heavyweight Nestle SA was the biggest boost to the STOXX 600, rising 1.3 percent.
Optimism over European politics helped investors shrug off a fractious G7 summit marked by stark divisions between the US and allies over trade. US President Donald Trump backed out of the joint G7 communique and fired off a volley of angry tweets after the summit.
“Ostensibly this should not be good for risk, though markets appear deaf at present to such rumblings,” Markets.com chief market analyst Neil Wilson said.
The only sign of concern about trade was in the auto sector, which was the worst-performing, down 0.5 percent.
“Countries need to wake up to the fact that Trump is going to deliver on trade,” a trader at a German bank said. “He will tax German autos.”
Politics aside, mergers and acquisition news drove the biggest moves in individual stocks.
Top of the STOXX 600 was Inmarsat, surging 12.8 percent to a five-month high after it rejected a takeover offer from US firm Echostar. Bid speculation over the British satellite company had driven the shares up on Friday, but the company’s confirmation came only after the market had closed.
“Echostar’s approach puts Inmarsat clearly into play,” Royal Bank of Canada analysts said, pointing to sayellite operators SES, Eutelsat and ViaSat, mobile operators and private equity as potential counter-bidders for the company.
Ocado Group PLC shares rose 2.1 percent after Bernstein Research analysts gave the British online grocer a double upgrade to “outperform” and Goldman Sachs Group Inc analysts upgraded it to a “buy.”
The stock is already up 152 percent this year, boosted most recently by a distribution deal with US supermarket chain Kroger.
“Ocado’s announced partnership with Kroger was transformational in our opinion,” Goldman Sachs analysts wrote. “Though the stock price moved materially to reflect this, our analysis at a local market level points to a US opportunity more than double Kroger’s initial commitment.”
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