European shares rose on Monday, recovering from significant losses in the previous session as investors weighed the implications of President Joe Biden’s withdrawal from the U.S. presidential race. The pan-European STOXX 600 index saw a 0.9% increase by 0847 GMT, ending its longest losing streak in nine months. The construction and materials sector led gains with a 1.3% rise, highlighted by Belimo’s impressive 12.8% jump after the Swiss heating and ventilation solutions company raised its sales forecast.
The political landscape in the U.S. shifted with Biden’s announcement on Sunday endorsing Vice President Kamala Harris as his party’s candidate. Richard Flax, chief investment officer at Moneyfarm, noted that a Trump-Vance ticket could be challenging for European equities due to the America-first agenda, whereas a Democratic victory might positively impact European stocks.
Last week’s technology stock selloff, driven by political uncertainties and potential U.S. trade restrictions, resulted in the benchmark index’s biggest weekly decline of 2024. Additionally, the lack of clear policy direction from the European Central Bank contributed to investor apprehensions. Flax mentioned that investors are cautious and avoiding aggressive moves, but monetary policy outlook remains a crucial factor.
In other market movements, Ryanair dropped 12.5% after reporting a 46% decline in quarterly profits, missing estimates, and dragging the travel and leisure sub-index down by 0.8%. Easyjet also fell by 6.5%. German battery maker Varta plunged 67% following discussions on restructuring scenarios that might involve Porsche taking a stake.
Conversely, Rentokil Initial saw a 10.8% gain after reports surfaced about former BT chief Philip Jansen’s interest in buying the British pest-control firm. FinecoBank rose by 7.2% after Swiss insurer Zurich Insurance Group considered a potential deal for the Italian online bank. The banking sector overall experienced a 1% increase.
The European stock market’s rebound was influenced by shifts in U.S. political dynamics and specific corporate developments, highlighting the ongoing interplay between political events and market reactions.
JPMorgan European Discovery Trust plc (LON:JEDT) is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
