European shares close near two-year peak as PMI data brings in cheers

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European shares close near two-year peak as PMI data brings in cheers

On Tuesday, a gauge of European stock indices spiked to their highest level in almost two weeks, mostly boosted by the cyclical stocks, after IHS Markit eurozone PMI data had hinted signs of an ease in pandemic-led downturn in the bloc’s economic activity, driving euro nearly to a three-month high against its British counterpart.

In point of fact, despite a hesitant beginning of the day amid conflicting narratives regarding a spike in pandemic cases in the United States alongside a jump in China’s industrial activities, vindicated by an upscaled demand of the economic bellwether copper futures, the eurozone stock exchanges had witnessed a high-tide shortly after reveal of the IHS Markit PMI (Purchasing Managers’ Index) data that had shown a better-than-anticipated recovery in June.

More importantly, according to the IHS Markit’s survey of eurozone PMI (Purchasing Mangers’ Index) data, the index shot up to 47.5 in June compared to a reading of 31.9 in May, which followed a record low of 13.6 in April, however, the eurozone economy had still been in recession considering the benchmark 50.0 level that demarcates growth from recession.

European shares rally after upbeat eurozone PMI data

In point of fact, while Tuesday’s IHS Markit’s PMI survey data for eurozone economy came as a blessing, signalling a likely end of the smallest recession on record appearing on the horizon, the regional pan-European STOXX 600 gained 1.3 per cent with economically sensitive indices such as lenders, miners, insurers and automakers, all gaining between 1.9 to 3.3 per cent.

Citing statistics, on the day’s European market closing bell, almost all of the major indices ended up sharply higher, while London’s FTSE 100 gained 1.34 per cent to 6,328.34, French CAC 40 surged 1.39 per cent to 5,017.68 and Frankfurt’s DAX jumped 2.13 per cent to 12,523.76.

Elsewhere in the Europe, Madrid’s benchmark IBEX 35 rose by 1.26 per cent to 7,438.40, while Italy’s FTSE MIB torrented 1.86 per cent to wind down the day at 19,841.58. Meanwhile, referring to the upbeat IHS Markit eurozone PMI data for June that appeared to have bolted out of the blue followed by an ease of lockdown measures across the Europe, a head of European portfolio management team at Pyrford International, a part of BMO Global Asset Management, Daniel McDonagh said on the day’s European market closure, “It would no longer surprise me if the data is a surprise on the upside.

The big question still is whether we can proceed on the exit strategy from the lockdown in a smooth manner and really avoid a step backwards.