European shares ended a volatile session higher on Monday, lifted by strong gains on Wall Street and a rally in cyclical stocks as improving data spurred hopes of a faster economic recovery. After hovering near flat earlier in the session, the pan-European Stoxx 600 index rose 0.4 per cent and euro zone blue-chip stocks jumped 0.9 per cent. The euro zone banks were the biggest gainers, up 3.2 per cent after data showed that a recovery of economic sentiment across the bloc intensified in June. A bright start for Wall Street also lifted the mood, as talks of more stimulus helped investors to look past a spike in the global death toll from Covid-19. Aside from banks, other growth-sensitive sectors such as oil and gas, industrial companies and car makers led gains in Europe.
The Iseq rose 1 per cent to 6,030 in line with its European peers. Ryanair was the main driver, rising nearly 5 per cent to €10.81 as Ireland and Britain geared up to loosen quarantine rules for travellers. The banks also benefited from the upswing generally and more positive euro zone business data, with AIB up 7 per cent at €1.12 and Bank of Ireland up 8 per cent at €1.81. The lift also came in the wake of news that AIB was introducing wide-ranging restrictions on mortgage lending in light of the Covid-19 pandemic. Permanent TSB was broadly flat on the day, closing at 52 cent. The reopening of further tranches of the economy was also viewed as a positive for home builders, with Cairn Homes up 2.3 per cent at 90 cent and Glenveagh up 0.3 per cent at 68 cent. Kerry Group, one of the index's strongest performers in recent months, was flat at €111, while insulation giant Kingspan was up 1.7 per cent at €57.75.
US markets seemed detached from the reality on the ground on Monday, as they helped drag their European cousins upwards. The Ftse 100, which had been fairly stable up until the opening bell in New York, jumped as it saw the upbeat mood on the other side of the pond. The index closed the day up 66.47 points, or 1.1 per cent, to 6,225.77. It has followed positive US traders, who sent the Dow Jones and the S&P 500 up 1.7 per cent and 1.1 per cent respectively, despite indications that the coronavirus pandemic was getting worse, not better, in the US. In the UK, Aer Lingus owner IAG topped the Ftse 100, rising 4 per cent , while EasyJet added more than 5 per cent, as the government prepared to lift quarantine rules for travellers from some countries.
In a fairly quiet day for company news, BP dominated headlines after selling its petrochemicals arm to Ineos for £4 billion, a move that sent its shares up 3.4 per cent, just enough to scrape into the top five winners on the Ftse 100. Frankie & Benny's owner The Restaurant Group confirmed it would shut 125 of its restaurants after creditors voted in favour of a restructuring deal. Its shares ended up 3.5 per cent.
Although the pace of a market recovery has slowed following an initial rally from March lows, European stocks have outperformed their US counterparts in June, helped by the region's relative success in reopening its economy and the European Union's proposed €750 billion recovery fund. The world's largest asset manager, BlackRock, upgraded European equities to "overweight" on Monday, with the region poised to benefit from the restarting of economies. German scandal-hit payments company Wirecard soared 154.5 per cent following a near 170 per cent plunge over the past three weeks on reports that French payments processor Worldline and other private investors were interested in buying parts of the company. Austrian sensor producer AMS jumped 5.1 per cent after reports the company was poised to get the go-ahead from the European Union for its acquisition of German lighting group Osram.
Wall Street's main indexes rose on Monday following a sharp sell-off last week, as investors clung to hopes of a stimulus-backed economic rebound even as coronavirus cases surged, while a jump in Boeing shares boosted the blue-chip Dow. The plane maker rose 6.4 per cent after the Federal Aviation Administration confirmed on Sunday it had approved key certification test flights for the grounded 737 Max that could begin as soon as Monday. A spike in virus infections in southern and western states last week spooked US markets, but the threat of a deeper-than-feared recession has led investors to expect that the Federal Reserve or Congress will step in with more stimulus.
"The market believes that the Fed has its back," said Sam Stovall, chief investment strategist at CFRA Research in New York. "If things get really bad, the Fed will step in with additional monetary easing and basically reach into their bag of tricks to do whatever they need to support the market." All 11 major S&P 500 sub-indexes were in the black, with industrial and material stocks leading gains. The benchmark S&P 500 has rebounded since a coronavirus-driven crash in March, up about 17 per cent since April and set for its best quarter since 1998, as the economy shows signs of a pick-up. – Additional reporting by Reuters