Stocks

European shares extend gains as travel stocks shine

Reuters May 28 | Updated on May 28, 2020 Published on May 28, 2020

The pan-European STOXX 600 index was up 0.9 per cent.   -  Bloomberg

European shares rose for the fourth straight session on Thursday, as optimism over businesses reopening and a massive stimulus plan for the European Union outweighed concerns over rising US-China tensions.

The pan-European STOXX 600 rose 0.9 per cent to hit a fresh 11-week high, led by a 2 per cent jump in travel & leisure stocks.

UK's Cineworld Group Plc surged 24 per cent as it expects to reopen all its cinemas in July and secured an extra $110 million from lenders to help it survive the coronavirus lockdowns.

Most European subsectors gained, with healthcare and retail also boosting the STOXX 600.

The benchmark index has climbed more than 30 per cent from its March lows as investors pinned hopes on a gradual recovery, with policymakers injecting trillions of dollars in the global economy and drugmakers racing to develop a COVID-19 vaccine.

“We've optimistic around vaccine and are also seeing more and more companies reopening. That is the main focus for markets now,” said Edward Park, deputy chief investment officer at Brooks Macdonald Asset Management.

Investors also looked past risks of fresh escalation in Sino-US tensions after China's parliament approved a decision on Thursday to go forward with national security legislation for Hong Kong.

US President Donald Trump has promised action over Hong Kong, with an announcement at the end of the week.

“Markets are also taking solace from the fact that neither party seems incentivised to escalate threats economically so far. But I think there will be a point when markets will be fixated on US-China tensions.”

A Reuters poll showed recovery from the coronavirus-led financial crash will take time for European stocks, which are expected to end 2021 around 10 per cent below this February's record high.

Among other stocks, French aerospace company Safran SA rose 2.2 per cent after Boeing Co said it had resumed production of its 737 MAX passenger jet at its Washington plant.

Semiconductor stocks Infineon Technologies AG, Dialog Semiconductor Plc and ASML Holding NV gained between 2.4 per cent and 5 per cent after US firm Micron Technology Inc raised its revenue forecast for the third quarter.

Belgian telephone, internet and television service provider Proximus NV rose 4 per cent after Citigroup upgraded the stock to “buy”.

Scandinavian airline SAS fell 8.0 per cent and Norwegian Air tumbled 8.6 per cent after both the airlines reported a deep quarterly loss as the virus outbreak froze global travel.

Published on May 28, 2020
This article is closed for comments.
Please Email the Editor