On Monday, European stocks bounced back sharply as investors snapped up beaten-down shares in the banking sector that hit a record low last week and data gave signs of pick-up in the Chinese economy.
The pan-European STOXX 600 index jumped 2.2%, recording its biggest percentage gain since mid-June, after last week’s 3.6% drop.
The broader banks index surged 5.6% in its first session of gain in eight days.
HSBC Holdings surged 8.9% after Chinese insurance group Ping An, the biggest shareholder in the British bank, boosted its stake to 8.00% from 7.95%.
Commerzbank rose 5.6% after it named a top manager at rival Deutsche Bank, Manfred Knof, to lead the bank. The stock move was, however, in line with the broader sector.
Investors have shunned Europe’s banking sector hit by a cocktail of lower global borrowing costs, rising bad loans due to the economic downturn and a dirty money scandal that made it the worst performer this year with a 42% decline.
“There’s a chance for tactical rebalancing, but not a structural rally in banks,” said Dhaval Joshi, European investment strategist at BCA Research.
Investors have been wary about a second wave of coronavirus infections hampering business activity in Europe, while uncertainty about more U.S. fiscal stimulus and a Brexit trade deal have all sparked bouts of volatility in financial markets this month.
“With each of these issues remaining ‘live’ in the near term, we expect markets to remain choppy for a bit longer,” Morgan Stanley’s equity strategist Graham Secker wrote in a note.
However, the worst weekly selloff in three months drove bargain hunters to step in, while data showed profits at China’s industrial firms grew for the fourth straight month in August helped the trade-sensitive German index outperform.
Europe’s auto and industrial sectors, heavily reliant on Chinese demand, rose more than 3.5%.
ArcelorMittal SA gained 4.8% after Cleveland-Cliffs Inc agreed to buy the U.S. assets of the steelmaker for about $1.4 billion.
Sonova Holding AG, the world’s biggest hearing aid maker, surged 14.4% as it expects revenue to return to growth in the next six months.
London-based spirits maker Diageo rose 6.1% after saying it had made a strong start to its fiscal year 2021, with its U.S. business performing ahead of expectations.
Reported by Sruthi Shankar
Sourced Reuters
For more Finance & Investment news follow i-invest Online.
- Seven summer reads to elevate your leadership
This season’s standout business books offer fresh perspectives from leading academics, CEOs and industry pioneers on the future of leadership, talent and sustainable growth If you’re looking forward to taking a well-deserved break from your desk this summer, now’s the perfect time to catch up on those must-read business books everyone’s talking about. Whether you’re… Read more: Seven summer reads to elevate your leadership - Social businesses need better policy and support – not more bureaucracy
New research reveals how red tape, resource misuse and conflicting goals are stopping social businesses from providing sustainable regional value Social businesses are prevented from delivering sustainable regional value due to complex policies and unclear guidance from local authorities, unnecessary financial constraints, and resource misuse finds new research from Durham University Business School. The study provides a… Read more: Social businesses need better policy and support – not more bureaucracy - AI is not the disruption. Your operating model is
The five per cent of organisations capturing value from AI are not deploying tools faster – they are redesigning how work gets done, says Stuart J. Green A chief executive showed me her board pack: five AI pilots and a 12% margin target by 2026. I asked which pilots she had been inside, which workflows… Read more: AI is not the disruption. Your operating model is - AI is not one technology – and leaders should stop treating it that way
To prepare effectively for the future, Mehdi Paryavi argues that businesses should stop viewing AI as a single phenomenon and start focusing on agentic AI as distinct from today’s generative tools Reports about the AI boom are now your quotidian fare. You can easily find analysts proclaiming, “X percent of companies are now using AI,”… Read more: AI is not one technology – and leaders should stop treating it that way - Why the best sustainability investments don’t depend on customers caring
Consumer belief is the riskiest asset on the balance sheet, argue Goutam Challagalla and Frédéric Dalsace. The real question is whether customers would buy it anyway For more than a decade, ESG-linked funds and corporate sustainability strategies have run on the same quiet assumption: spend more on sustainability, and the market will eventually reward you… Read more: Why the best sustainability investments don’t depend on customers caring