Europe: Shares close at record highs as signs of thaw in US-China tensions build
Investors are focused on central bank policy meetings this week for clues on their interest rate trajectory
[BENGALURU] European shares closed at record highs for the third consecutive session as signs of easing Sino-US trade tensions buoyed global risk appetite, while declines in healthcare shares limited gains.
The continent-wide Stoxx 600 index closed up 0.2 per cent, while other major regional indexes were flat to slightly higher.
Italy’s benchmark index outperformed peers with a 1 per cent rise, boosted by heavyweight bank stocks.
Meanwhile, global risk appetite was lifted after US President Donald Trump said the US and China are set to “come away with” a trade deal, as he is expected to meet his Chinese counterpart later this week to decide on the framework of a trade deal hashed out over the weekend.
A deal would pause steeper US tariffs and Chinese rare earths export controls.
“Some positive developments between the US and China seem to be boosting sentiment towards the market… that’s a good place to start…,” said Michael Field, chief equity analyst at Morningstar. European banks and the tech sector rose 1.2 per cent each.
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Conversely, healthcare stocks fell 0.5 per cent. Novartis fell 0.9 per cent after the drugmaker said on Sunday (Oct 26) that it agreed to acquire US biotech firm Avidity Biosciences for about US$12 billion in cash. Roche declined 1.4 per cent after a Jefferies rating downgrade.
Investors are focused on central bank policy meetings this week for clues on their interest rate trajectory. The US Federal Reserve is widely expected to cut interest rates by a quarter percentage point at its Wednesday meeting, with bets amplifying after Friday’s softer-than-expected inflation report.
The European Central Bank (ECB) is expected to hold rates steady later this week. “The ECB is in a relatively comfortable position. Inflation continues to hover around the 2 per cent target. The economic situation is mixed… (but) we expect headwinds to fade next year,” said Felix Schmidt, senior economist at Berenberg.
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Schmidt also said that a rebound in eurozone inflation will force the ECB to hike rates from mid-2027 onwards. Porsche rose 3 per cent after the luxury carmaker reported on Friday an adjusted operating loss that was smaller than the market had feared.
Shares in Sydbank rose 5.5 per cent after the Danish bank agreed to a merger deal with Vestjysk Bank and Arbejdernes Landsbank. London-listed shares of HSBC Holdings pared declines to end flat after saying it will book a US$1.1 billion provision in its third-quarter results after losing part of an appeal in a lawsuit tied to Bernard Madoff’s Ponzi scheme. Separately, a survey showed German business morale rose in October. REUTERS
