Stoxx 600 rises as China relaxes Covid restrictions

LONDON (AP) — European stocks closed higher on Monday as traders grew comfortable with the easing of COVID-19 restrictions in China while keeping an eye on new inflation figures in the region.

The pan-European Stoxx 600 provisionally closed 0.6% higher, with technology stocks rising 2.1% to lead gains as most sectors and major stocks ended in positive territory.

Looking at individual stocks, shares in Danish hearing aid maker GN Store Nord gained nearly 12% to lead the European blue chip index.

Siemens added 2.4% after the German conglomerate’s mobility unit struck an $8.7 billion high-speed rail deal in Egypt.

There was a wave of relief in European markets after authorities in Shanghai announced the lifting of restrictions from Wednesday, with increased production now expected to start in the manufacturing and technology hub.

susannah streeter

Senior Investment and Markets Analyst, Hargreaves Lansdown

The general market sentiment was boosted over the weekend by the relaxation of Covid controls in the major Chinese cities of Beijing and Shanghai.

“There was a wave of relief in European markets after authorities in Shanghai announced the lifting of restrictions from Wednesday, with increased production now expected to start in the manufacturing and technology hub,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

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“Stimulus measures to jump-start Shanghai’s economy are also helping to lift confidence, in the hope that they could help revive business and consumer spending.”

Stocks in the Asia-Pacific region rose sharply across the board last night, with Japan’s Nikkei 225 adding 2.2% to lead gains ahead of a big week of economic data releases for the region.

Markets in the US are closed on Monday for the Memorial Day holiday, after the S&P 500 and Dow Jones Industrial Average snapped losing streaks to post their strongest week since November 2020.

The US dollar index, which tracks the dollar against a basket of its peers, hovered below 101.5 on Monday morning. Earlier, the index hit a five-week low as fears of further aggressive interest rate hikes by the Fed, beyond those expected in June and July, subsided over the past week.

skyrocketing inflation

Looking at the data, Spanish inflation jumped to 8.5% annually by EU harmonized standards in May, beating economists’ expectations of 8.1% in a Wall Street Journal survey, as prices fuel and food prices continued to rise.

German inflation also beat expectations in May, with harmonized consumer price increases coming in at 8.7% year over year, up from 7.8% in April and above the 8.0% projected in a Reuters survey of analysts. .

Euro zone economic sentiment was little changed in May, the European Commission’s monthly survey showed on Monday, inching to 105.0 from 104.9 in April. Improved optimism in the services sector offset declining confidence in the industry, the data showed.

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