European shares advanced on Monday, managing to recover from initial losses thanks to gains in automobile and bank stocks. The pan-European STOXX 600 saw a rise of 0.4% by 0838 GMT. The automobile sector led the upward trend with a notable 1.6% increase. This came as the European Union and China agreed to discussions regarding the proposed tariffs on Chinese-manufactured electric vehicles (EVs).
Banks in the eurozone also saw positive movement, with Italian lenders such as BPER, UniCredit, and Monte dei Paschi di Siena posting gains between 2.4% and 3.7%. This increase occurred in the lead-up to the first round of France’s parliamentary elections, which has become a focal point for investors. Polls indicated a lead for the far-right National Rally (RN) party and its allies.
France’s benchmark index started the week on a positive note, up by 0.5%. Investors were also anticipating remarks from several European Central Bank (ECB) members, including board member Isabel Schnabel, to gain insight into the central bank’s future monetary policy.
In terms of economic data, a survey revealed that German business morale unexpectedly declined in June due to a more pessimistic outlook on Europe’s largest economy. Carsten Brzeski, global head of macro at ING, noted, “The optimism at the start of the year has given way to realism. The latest readings have illustrated that the German economy is still struggling to gain more momentum.”
Last week, data indicated that the growth in German business activity, which had been rising over the previous two months, began to slow. Similarly, a broader reading for the eurozone showed a sharp deceleration in business growth. European shares had managed to regain some losses from the previous week, which followed a decline earlier in the month triggered by the French election results. However, the rally in technology stocks had slowed, limiting overall gains.
Among individual stocks, Hochtief saw an impressive advance of 8.7% after Jefferies upgraded the German construction firm from “hold” to “buy,” citing its increasing involvement in high-tech infrastructure projects. Belgian pharmaceutical company Argenx also experienced a significant jump of 7.1% following the approval of its treatment for chronic inflammatory demyelinating polyneuropathy by the U.S. FDA.
In the UK, Prudential added 6.3% after announcing a $2 billion share buyback programme. Conversely, Eurofins Scientific dropped as much as 19% after short seller Muddy Waters revealed it had taken a short position on the French testing company. Additionally, Germany’s Zalando fell 6.3% after Morgan Stanley downgraded the online retailer from “overweight” to “equal weight.”
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.
