European shares soar after slump on Evergrande worries

Music label Universal Music Group soared 38 per cent in its stock market debut

Photograph: iStock

Photograph: iStock

 

European shares rose on Tuesday after their biggest fall in two months on easing worries about the spillover from the crisis at China’s Evergrande, while music label Universal Music Group soared 38 per cent in its stock market debut.

The pan-European Stoxx 600 was up 0.9 per cent by 0743 GMT after sinking to a two-month low in the previous session.

Media, mining and energy stocks led early gains, while Germany’s DAX rebounded from its lowest level since late-July.

US stock futures also bounced a day after global markets were roiled by concerns the potential default by Evergrande, the world’s biggest property developer, could hurt China’s real estate sector, banks and the global economy.

Evergrande, struggling for cash, owes $305 billion.

Focus this week is also on policy meetings at a slate of central banks, including the US Federal Reserve, with investors expecting some of them to indicate they were ready to ease their pandemic-era stimulus to combat high inflation.

“Concerns about Evergrande remain but for now there appears to be a wait-and-see approach being adopted,” said Michael Hewson, chief market analyst at CMC Markets UK.

“The bigger question given the risks from events in China is whether the Fed adopts a less hawkish stance tomorrow in order to buy itself some time until the situation becomes clearer.”

Europe’s benchmark Stoxx 600 has fallen from record highs in September after seven straight months of gains on fears of persistently high Covid-19 cases and signs of a slowdown in the global economic recovery.

However, helping sentiment on Tuesday, travel-related stocks including British Airways-owner IAG, cruiseliner Carnival Corp and InterContinental Hotels Group jumped between 2 per cent and 5 per cent following the relaxation of US travel curbs.

Britain’s National Express rose 4 per cent after rival Stagecoach Group said it was in talks with National Express about a possible all-share merger.

Stagecoach’s shares jumped 17.3 per cent.

Universal Music Group, the business behind singers such as Lady Gaga, Taylor Swift and The Weeknd, surged 38 per cent in its first day of trading, giving it a market capitalisation of more than €46 billion .

Shares of owner Vivendi sank 16.7 per cent.

Sweden’s gardening power tools group Husqvarna tumbled 5.4 per cent after warning it could potentially lose top line sales of up to around 2 billion crowns due to a supplier dispute.

All major European bourses were up in morning trading, with the UK’s FTSE 100, Spain’s IBEX and Italy’s FTSE MIB gaining between 0.7 per cent and 0.9 per cent. – Reuters