European shares surge on recovery hopes, upbeat eurozone manufacturing PMI

by   |  VIEW 487

European shares surge on recovery hopes, upbeat eurozone manufacturing PMI

On Monday, a gauge of European bourse had winded down the day in an affirmative territory, almost entirely buoyed up by recent signs of recovery of the bloc’s manufacturing PMI (Purchasing Managers’ Index), as investors appeared to be stockpiling the cyclicals over optimisms of an earlier than anticipated economic recovery.

In point of fact, in latest vindication of a vivid demonstration of investors’ hope on eurozone’s economic recovery, the regional pan-European STOXX had closed the day 1.1 per cent higher, marking up the index’s highest closure since the 9th of March despite a thin-volume trading day amid market holidays in Germany, Norway, Switzerland and Denmark.

Apart from that, as investors’ hopes over an economic recovery had ramped up following reveal of the IHS Markit manufacturing PMI (Purchasing Managers’ Index) data that had unfurled an uptick in eurozone manufacturing PMI to 39.4 from an earlier 33.4 in April, the index’s 22-year low reading on record, traders had brushed aside the concerns related to a sharp tottering of the bloc’s factory activity in May.

Aside from that, traders’ optimisms had also amplified further following an ease in US-China spat as the US President Donald Trump’s last week’s remarks over China’s National Security Law aimed at prevailing the pro-democracy protest of Hong Kong, had not soured the feasibility of the Sino-US ‘Phase One’ trade deal signed off on mid-January.

European shares ramp up on recovery hope, but analysts warned gains could be shortlived

Citing statistics, on Monday’s European market closure, London’s FTSE 100 surged 1.48 per cent to 6,166.42 and French CAC 40 rose by 1.43 per cent to 4,762.78.

Elsewhere in the Europe, Madrid’s IBEX 35 gained 1.76 per cent to 7,221.40, while Italy’s benchmark FTSE MIB soared 1.79 per cent to wind down the day at 18,523.71. Meanwhile, citing that the recent gains could be shortlived given the extent of technicality in the rebound, an analyst at JPMorgan, Cazenove wrote in a client note on the day’s European market closure, “The current beta rotation is helping the overall market through increased breadth…Current upbeat PMI will not end up building on itself as the rebound is largely technical in nature.