Stoxx 600 higher as China eases Covid restrictions

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LONDON — European stocks closed higher on Monday as traders took comfort in the easing of Covid restrictions in China while keeping a cautious eye on new inflation figures in the region.

The pan-European Stoxx 600 tentatively closed 0.6% higher as tech stocks climbed 2.1% to lead the gains as most sectors and major exchanges ended in positive territory.

Looking at individual stocks, shares of Danish hearing aid maker GN Store Nord gained nearly 12% to top the European blue chip index.

Siemens added 2.4% after the German conglomerate’s mobility unit secured an $8.7 billion high-speed rail deal in Egypt.

There was a wave of relief in European markets after authorities in Shanghai announced a lifting of restrictions from Wednesday, with additional production now expected to start in the manufacturing and technology hub.

Susannah Streeter

Senior Investment and Market Analyst, Hargreaves Lansdown

General market sentiment was boosted over the weekend by a relaxation of Covid controls in the major Chinese cities of Beijing and Shanghai.

“There was a wave of relief in European markets after authorities in Shanghai announced a lifting of restrictions from Wednesday, with increased production now expected to start in the manufacturing and technology hub,” said Susannah Streeter, Principal Investment and Market Analyst at Hargreaves Lansdown.

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“The stimulus measures to revive Shanghai’s economy are also helping to boost morale, with the hope that they could help revive business and consumer spending.”

Overnight, stocks in the Asia-Pacific region rose sharply across the board, with Japan’s Nikkei 225 adding 2.2% to lead the gains ahead of a big week of economic data releases for the region.

U.S. markets are closed Monday for the Memorial Day holiday, after the S&P 500 and Dow Jones Industrial Average snapped losing streaks to post their strongest week since November 2020.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was hovering below 101.5 on Monday morning. The index hit a five-week low as fears of further aggressive interest rate hikes from the Fed, beyond those expected in June and July, eased during the week. last.

Skyrocketing inflation

On the data front, Spanish inflation jumped to 8.5% a year by EU harmonized standards in May, beating economists’ expectations of 8.1% in a Wall Street Journal poll, as fuel and food prices continued to rise.

German inflation also beat expectations in May, with harmonized consumer price increases reaching an annual rate of 8.7%, up from 7.8% in April and ahead of the 8.0% projected in a survey of Reuters analysts.

Eurozone economic sentiment was little changed in May, the European Commission’s monthly survey showed on Monday, rising to 105.0 from 104.9 in April. Improved optimism in the services sector has offset the loss of confidence in the industry, the data showed.

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