European Shares Reach Two-Week Highs Thanks to Miners and Prosus

On Monday, European shares rose to a high of two weeks, thanks to mining stocks as China lifted COVID-19 curbs, which gave global commodities a lift and also eased fears of inflation. Meanwhile, Prosus’ plans of trimming its stake in Tencent saw the Dutch company’s stock rally.

Index records gains

There was a 1.1% gain recorded in the pan-European STOXX 600 index, as it mirrored a sharp rise that had been seen on Wall Street in the previous week. This was after easing concerns amongst investors about the persistently high numbers of inflation.

There were advances recorded in nearly all major European sectors, with a 2.8% jump in mining shares. There was also an increase of 2.4% and 1.8%, respectively, in stocks of luxury retailers Richemont and LVMH which derive a significant portion of their revenue from China.

Market analysts said that China’s good news benefits everyone because it gives hopes that supply chain bottlenecks can be reduced and this can ease worries regarding inflation. However, they also added that the bounce right now could be a short-lived one and may not last because investors are gearing up for earnings season.

Volatile trading

Global financial markets have remained volatile in recent days, as investors are trying to assess the impact of the global increase in interest rates and the surging inflation on economic growth and corporate earnings.

Later this week, there is a ton of data due for release, so investors have now turned their focus toward it. The economic data includes the consumer confidence in the eurozone as well as final manufacturing activity and the consumer price index for Germany.

The annual forum of the European Central Bank (ECB) is also underway and comments of prominent central bankers like Jerome Powell, the Chairman of the US Federal Reserve, and Christine Lagarde, the President of the ECB, will be viewed carefully. Investors are looking for hints of policy outlook, as the possibility of a dovish stance resulted in the rally seen in equity markets in the previous week.

Stock performances

Prosus NV gave the tech sector a boost, as it jumped 13.5% after the tech giant announced that it would gradually sell its stake worth $100 billion in Tencent. Currently, it owns a stake of 28.9% in the Chinese software giant.

There was also a 2.8% gain recorded in Intesa Sanpaolo, after the biggest bank in Italy cut its share buyback program by half for the year, bringing it down to 1.7 billion euros. There was also a 5.3% jump in Faurecia after the stock rating of the French car parts maker was adjusted by Jeffries from ‘hold’ to ‘buy’.

Other stock news saw a 4% decline in Ipsen SA, as it plummeted to the bottom of the STOXX 600 index. This was after the biopharma company based in Paris announced that it was acquiring Epizyme Inc., a cancer drug developer based in the United States. The euro was also trading higher against the dollar and the pound for the day.

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