European Markets Close On Upbeat Note On Buoyant Economic Data

European markets closed on an upbeat note on Tuesday with several benchmark indices from the region posting new all-time highs, amid rising optimism about global economic recovery.

Stronger than expected economic data from China, and factory activity and inflation data from the euro area underpinned sentiment.

An announcement from French finance minister that the government will set up a 3 billion euro fund to support mid-sized and large companies as they emerge from the pandemic crisis helped as well.

The pan European Stoxx 600 climbed 0.75%. The U.K.’s FTSE 100 surged up 0.82%, Germany’s DAX advanced 0.95% and France’s CAC gained 0.66%, while Switzerland’s SMI ended 0.63% up.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Ireland, Netherlands, Norway, Portugal, Russia, Spain, Sweden, Turkey and Ukraine closed higher.

Iceland drifted lower, while Greece and Poland ended flat.

Mining and energy stocks were in demand after commodity prices moved up sharply.

In the UK market, Anglo American Plc, Antofagasta, Rio Tinto, WPP, BHP Group, Weir Group, Evraz, Intermediate Capital Group, Pearson, Glencore, BT Group, BP, Johnson Matthey, Admiral Group, Royal Mail, IHG and United Utilities gained 2.5 to 4%.

HSBC Holdings, Burberry Group, AstraZeneca and Standard Chartered ended notably lower.

In the French market, Faurecia, Accor, Technip, Sodexo, Air France-KLM, Valeo, Total, ArcelorMittal, Publicis Groupe and Credit Agricole gained 3 to 5.6%.

In Germany, Daimler shares rose sharply after the automaker and Finland’s Nokia Corp. signed a patent licensing agreement. Under the deal, Nokia licenses mobile telecommunications technology to Daimler and receives payment in return.

Volkswagen shares rallied amid speculation that Porsche Automobil Holding SE, Volkswagen’s majority voting shareholder, would be separately listed.

Continental, BMW, Thyssenkrupp, Lufthansa, BASF and Vonovia gained 2 to 4%. HeidelbergCement, Siemens, MTU Aero Engines, Covestro and Deutsche Telekom also rose sharply.

Saint-Gobain shares ended notably higher after the world’s leading glass manufacturer announced the sale of its Glassolutions Objekt-Center to privately-owned AEQUITA group based in Munich. Saint-Gobain noted that this sale is as part of its continued portfolio optimization strategy.

In economic news, Euro zone manufacturing activity expanded at a record pace in May despite supple bottlenecks, a survey showed. IHS Markit’s final Manufacturing Purchasing Managers’ Index (PMI) rose to a new record high of 63.1 in May from April’s 62.9. This was up from a prelim 62.8.

Inflation in the region hit its highest level since October 2018 as COVID-19 restrictions across Europe were scaled back, Eurostat said.

Consumer prices in the 19 countries sharing the euro reached 2%, beyond the target of the European Central Bank.

PMI reading hit record highs in the Netherlands, Austria, Ireland, and Italy. In Germany, the factory PMI fell to a three-month low of 64.4, but was stronger then its flash reading of 64.

France’s manufacturing PMI score rose to 59.4, which was the strongest since September 2000. The flash reading was 59.2.

Spain’s factory PMI climbed to 59.4 from 57.7 in April. The latest reading was the highest since May 1998.

Germany’s unemployment rate dropped marginally in April, falling to 4.4% from 4.5% in March, labor force survey results from Destatis showed. On an unadjusted basis, the unemployment rate remained unchanged at 4.6% in April. The number of unemployed decreased 29,000 or 1.4% on month to 2.01 million.

The UK manufacturing sector expanded at a record pace in May on stronger production growth and record gains in new orders, despite a surge in inflationary pressures. The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) was finalized at 65.6 in May, up from April’s 60.9 as new work intakes rose at record rate.

U.K. house prices grew 10.9% year-on-year in May, faster than the 7.1% rise seen in April, data published by the Nationwide Building Society revealed. This was the biggest increase since August 2014 and was better than the economists’ forecast of 9.2%.

Switzerland’s retail sales increased in April, preliminary data from the Federal Statistical Office showed. Retail sales adjusted for sales days and holidays grew by 35.7% year-on-year in April, the data said.

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