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Aug. 29, 2019, 6:21 a.m. EDT

European stocks climb as China cools trade tensions and Italy solves political crisis

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By Callum Keown


Getty Images
Italy’s Prime Minister Giuseppe Conte (right), who has been given a mandate to form a new government, greets China’s President Xi Jinping earlier this year.

European stocks climbed on Thursday as China eased trade war tensions and raised hopes of a calm resolution.

The Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.40% and the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.33% both rose 1%, while the German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.16%  lifted 1.1% on a strong morning for stocks.

Italy’s FTSE MIB /zigman2/quotes/210598024/delayed IT:I945 -0.31% led the risers, climbing 1.9% after President Sergio Mattarella gave Prime Minister Giuseppe Conte a mandate to form a new government.

What’s moving the markets?

China Commerce Ministry spokesman Gao Feng cooled trade-war tensions on Thursday by saying the country would not immediately respond to the latest tariffs imposed on it by the U.S.

He added that China remained in contact with Washington and that discussions should move toward removing tariffs to prevent escalation.

The comments, sparking hopes of a calm resolution between the world’s two largest economies, triggered a surge in European stocks.

David Madden, CMC Markets analyst, said: “The largely hopeful tones of the update from China has lifted market sentiment, and that sparked buying this morning.

“US-China relations have been volatile recently, but for now there is a sense that things are heading in the right direction, and that has coaxed some traders back into the market.”

Italy’s FTSE MIB was pushed higher still after President Sergio Mattarella gave Prime Minister Giuseppe Conte a mandate to form a government.

The country’s Democratic Party and the populist 5 Star Movement agreed to form a new coalition on Wednesday, leaving former Deputy Prime Minister Matteo Salvini on the sidelines.

Germany’s minister for economic affairs, Peter Altmaier, said the country’s corporate tax rate could be cut to 25% in a bid to help smaller businesses amid a gloomy backdrop.

Which stocks are active?

Bouygues /zigman2/quotes/202035785/delayed FR:EN +0.79% climbed 5.8% as the French conglomerate’s first-half operating profit beat expectations due to strong performance in its telecoms and TV businesses. The group stuck to its full-year guidance despite weakness in its construction businesses.

Pernod Ricard /zigman2/quotes/204974112/delayed FR:RI -0.45%   rose 3.1% after the Paris-based spirits company hiked its dividend and announced a share-buyback program. The company also agreed a $223 million deal to buy drinks manufacturer and marketer Castle Brands, adding Jefferson’s Bourbon and Brady’s Irish Cream to its portfolio.

Micro Focus /zigman2/quotes/207956281/delayed UK:MCRO -1.15% shares tumbled 24% after the software company warned full-year sales could drop 6-8% on last year’s, due to a deteriorating macro environment. The largest UK-based tech firm had previously forecast a 4-6% revenue drop.

/zigman2/quotes/210599654/delayed
XX : STOXX
402.22
-1.60 -0.40%
Volume: 0.00
Nov. 21, 2019 5:50p
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,238.55
-23.94 -0.33%
Volume: 592,405
Nov. 21, 2019 4:59p
loading...
/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
13,137.70
-20.44 -0.16%
Volume: 74,515
Nov. 21, 2019 6:30p
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/zigman2/quotes/210598024/delayed
IT : Borsa Italiana
23,279.78
-72.00 -0.31%
Volume: 0.00
Nov. 21, 2019 5:36p
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/zigman2/quotes/202035785/delayed
FR : France: Euronext Paris
37.03
+0.29 +0.79%
Volume: 1.18M
Nov. 21, 2019 5:37p
P/E Ratio
9.91
Dividend Yield
4.59%
Market Cap
€13.70 billion
Rev. per Employee
€307,756
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/zigman2/quotes/204974112/delayed
FR : France: Euronext Paris
167.25
-0.75 -0.45%
Volume: 377,676
Nov. 21, 2019 5:38p
P/E Ratio
30.51
Dividend Yield
1.87%
Market Cap
€44.32 billion
Rev. per Employee
€480,596
loading...
/zigman2/quotes/207956281/delayed
UK : U.K.: London
1,079.20 p
-12.60 -1.15%
Volume: 895,263
Nov. 21, 2019 4:35p
P/E Ratio
N/A
Dividend Yield
12.53%
Market Cap
£3.64 billion
Rev. per Employee
£159,552
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Callum Keown is a Barron's Group reporter for the Europe, Middle East and Africa region. He writes for MarketWatch, Barron’s, Penta and Financial News.

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