Equities Europe: Profits – Trump and Xi Jinping create a good mood

PARIS/LONDON (dpa-AFX) – The rapprochement in the US-Chinese trade dispute has given Europe’s stock exchanges a friendly start to the week. For the first time since early May this year, the leading European index managed to jump back above the 3500 mark. Most recently, the leading European index EuroStoxx 50 was 0.87 per cent higher at 3503.89 points. Semiconductor and technology stocks, as well as car manufacturers, benefited in particular from the outcome of the meeting between US President Donald Trump and China’s head of state and party Xi Jinping at the weekend. The much-noticed discussion between the two heads of state at the G-20 summit had led to a “cease-fire” in the trade war and the decision to renegotiate to settle the dispute. Surprisingly, Trump lifted the ban on China’s telecom giant Huawei for the time being. Also, the US President promised to temporarily suspend the threatened extension of punitive tariffs against China, which was a precondition for Beijing.

Investors on the Paris and London stock exchanges also reacted with relief. The French Cac 40 rose by 0.82 per cent to 5584.49 points. The British benchmark index FTSE 100 advanced by 1.06 per cent to 7504.38 points. Nevertheless, neither Trump nor Xi Jinping are likely to want to rush to an agreement. Both leaders seemed to be betting on each other “that they have strong cards in their hands.” Across Europe, technology stocks climbed most strongly with an average price gain of 1.75 per cent. The banks and financial stocks also presented themselves firmly. On the other hand, investors now ignored the utilities, which are considered defensive – the corresponding sector index fell by around half a per cent. In the EuroStoxx 50, the shares of the supplier ASML, which manufactures systems for the chip industry, were ahead with a premium of more than three per cent. On the Paris Stock Exchange, STMicro’s shares even rose by almost six per cent. Shares of carmakers who were at least indirectly affected by the customs dispute also increased. Their sector index advanced by nearly one and a half per cent. The courses of the network equipment suppliers suffered under the interrupted Huawei ban because the Chinese are a competitor in the construction of the 5G networks. Ericsson slipped by almost one per cent. Nokia lost even more at times but recently turned in the profit zone. Meanwhile, profit-taking caused the shares of the EssilorLuxottica eyewear group to fall by two per cent to the end of the Eurostoxx 50. In the morning, the stock reached its highest level since mid-November 2018.

 

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