By Dave Morris
European markets rallied Monday on the perceived lightening of trade skirmishes among the U.S. and China, with tech stocks among the best performers.
How did markets perform?
The Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP -2.90% rallied to 388.1, up nearly 0.9%. It increased 0.7% Friday.
The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -3.83% jumped 1.1% to 7,509.9, after rising 0.3% Friday.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0970% fell 0.4% to $1.2646, giving back Friday’s 0.4% gain almost exactly.
In Germany, the DAX /zigman2/quotes/210597999/delayed DX:DAX -3.94% climbed 1.3% to 12,558.4. It advanced 1% Friday.
France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -4.30% grew 0.8% to 5,582.1, after moving up 0.8% Friday.
Italy’s FTSE MIB /zigman2/quotes/210598024/delayed IT:I945 -2.97% edged up 0.3% to 21,291.6. On Friday it swelled 0.6%.
What’s moving the markets?
Weekend reports from the G-20 summit in Osaka, Japan that U.S. President Donald Trump and Chinese President Xi Jinping had agreed to restart trade negotiations put investors in a bullish mood Monday. The relief rally lifted European indexes, though they have retreated somewhat from their highs.
“The two most positive things from the weekend were that President Trump won’t put the additional tariffs on China for the ‘time being’ and that he softened his stance on Huawei. He will allow U.S. companies to sell some equipment to Huawei, as long as it was ‘no great national security problem’,” Deutsche Bank strategist Jim Reid told clients in a note.
Judging by fresh economic data, China’s manufacturing sector could use a break from trade tensions. The Markit/Caixin Purchasing Managers’ Index (PMI) survey showed manufacturing in June was still contracting, coming in at 49.4 versus a flat reading of 50 predicted.
The Eurozone’s Markit PMI manufacturing survey also came in lower than expected in June, at 47.6 versus a consensus prediction of 47.8. Germany was not immune; its Markit PMI manufacturing (Final) PMI for June showed 45 versus 45.4 predicted.
Which stocks are active?
The announcement that the U.S. would remove some sanctions from Chinese electronics company Huawei fueled relief for chip makers. STMicroelectronics NV /zigman2/quotes/207734906/lastsale STM -6.18% shot up 6%, AMS AG /zigman2/quotes/205647546/delayed CH:AMS -9.12% popped 4.5% and Infineon Technologies AG /zigman2/quotes/203152288/delayed XE:IFX -4.14% climbed 4%.
British Airways parent International Consolidated Airlines Group PLC /zigman2/quotes/208070069/delayed UK:IAG -5.90% was caught in the jetwash after a downgrade from Bernstein analysts, while Deutsche Lufthansa cut it /zigman2/quotes/205496028/delayed DE:LHA -5.95% from buy to market perform. The analysts cited the risk that, as leisure travel slows in Europe, corporate travel could follow suit. IAG shares shrank 1.3% while Deutsche Lufthansa moved down 0.6%.
Burberry Group PLC /zigman2/quotes/205386705/delayed UK:BRBY -6.76% was upgraded to neutral from sell by Goldman Sachs, which said weakness in the U.K. currency could prove to be a significant boost. Burberry also boasts an attractive price to earnings radio, the analysts wrote. Shares rose 3%.