European stock markets extend rally

European stock markets extend rally

London Stock Exchange LSE
Logo of the London Stock Exchange

LONDON: European stock markets rallied on Wednesday (Oct 31) with no "Halloween horrors" as investors were boosted by runaway US consumer confidence and upbeat corporate earnings, dealers said.

London closed the day 1.3 per cent higher, Frankfurt won 1.4 per cent and Paris surged 2.3 per cent, with shares in French cosmetics giant L'Oreal soaring 6.7 per cent on strong sales.

Wall Street also pushed higher, extending Tuesday's rally, with the Dow Jones Industrial Average climbing 1.2 per cent in midday trading. The broader S&P 500 was up 1.3 per cent and the tech-heavy Nasdaq Composite jumped 2.0 per cent.

"No Halloween horrors as Red October draws to a close," concluded CMC Markets analyst Michael Hewson.

October has been a painful month for equities with sometimes massive losses and observers warn of further pain, with Washington and Beijing seemingly unlikely to back down from their tariffs stand-off anytime soon.

Europe's markets had faltered on Tuesday, also on weak economic data and political uncertainty over Italy and Germany.

However, New York turned in a healthy performance on Tuesday - the Dow added 1.8 per cent while the S&P 500 and Nasdaq jumped 1.6 per cent - after data showed US consumer confidence at a new 18-year high in October.

The positive tone woke up trades in Asia, where equities leapt on Wednesday with attention also turning to the release of key US jobs data later in the week.

"There's been a strong rally in stock markets ... as investors seek to recover from the recent declines," noted XTB analyst David Cheetham.

IG analyst Joshua Mahony noted however that "this bullish market sentiment comes despite a somewhat dour 24-hours for the global growth picture".

Chinese factory activity slowed in October, official data showed on Wednesday. The Purchasing Managers' Index (PMI), a key gauge of factory conditions, came in at 50.2 for the month, just above the 50-point mark that separates expansion from contraction.

But analysts at Charles Schwab brokerage said "a string of upbeat earnings reports on both sides of the pond (are) helping offset lingering trade, Fed, and global growth uneasiness."


Despite Wednesday's rally, a mountain of problems - from China-US trade tensions and Brexit, to Chinese economic weakness and rising US interest rates - have not gone away.

"Even after this morning's gains, global equity markets are left licking their wounds after a brutal month," noted Cheetham at XTB.

"Ongoing US-Chinese trade tensions, slowing global growth and rising US interest rates all have contributed to the sell-off and the question going forward now is whether the worst of it is over or if there's another wave of selling into year-end.

"The recent stabilisation is a pleasing development at least," he added.

The euro hit a fresh two-month low at US$1.1305 on Wednesday. The dollar struck 6.9799 yuan, the highest level for a decade as the Chinese currency is pressured by US trade war fears.

Meanwhile, a strong jobs report out of Washington on Friday could provide another reason for the US Federal Reserve to hike rates and put further upward pressure on the greenback.

Bitcoin, marking its 10th anniversary, rose to US$6,309.89.

Key figures around 1630 GMT:

London - FTSE 100: UP 1.3 per cent at 7,128.10 points (close)

Frankfurt - DAX 30: UP 1.4 per cent at 11,447.51 (close)

Paris - CAC 40: UP 2.3 per cent at 5,093.44 (close)

EURO STOXX 50: UP 1.8 per cent at 3,202.18

New York - Dow: UP 1.2 per cent at 25,161.08

Tokyo - Nikkei 225: UP 2.2 per cent at 21,920.46 (close)

Hong Kong - Hang Seng: UP 1.6 per cent at 24,979.69 (close)

Shanghai - Composite: UP 1.4 per cent at 2,602.78 (close)

Euro/dollar: DOWN at US$1.1316 from US$1.1345 at 2100 GMT on Tuesday

Pound/dollar: UP at US$1.2758 from US$1.2706

Dollar/yen: DOWN at 112.95 from 113.13

Oil - Brent Crude: DOWN 11 cents at US$75.80 per barrel

Oil - West Texas Intermediate: UP 26 cents at US$66.44 per barrel

Source: AFP/de