Europe stocks rebound from worst drop in two weeks
Europe’s stock benchmark climbed Monday, rebounding from its steepest loss in two weeks thanks in part to optimism after Greece’s election.
Drug makers and oil companies also provided a lift, offsetting Volkswagen AG’s drag as the auto maker’s shares plunged as its emission-test scandal deepened VOW3, -18.89%
The Stoxx Europe 600 SXXP, +1.03% rose 0.7% to 357.36, after closing on Friday with its largest one-day loss since Sept. 4. Friday’s slide came after the U.S. Federal Reserve cited concerns about a slowdown in the global economy in its decision to keep interest rates at a record low.
European equities are “bouncing back following the re-election of Syriza in Greece, which is expected to pave the way for the passage of key reforms,” said Colin Cieszynski, chief market strategist at CMC Markets, in a note Monday. Read: ‘Grexit’ risks fade after Tsipras wins Greek election
The pharmaceutical sector helped prop up the pan-European benchmark, with heavyweight Novo Nordisk AS NOVOB, +2.86% NVO, +1.88% up 2.6% after Swedbank lifted the Danish insulin maker to strong buy from buy.
Shares of Shire PLC SHP, +1.12% SHPG, +2.31% climbed 1% after its Intuniv drug won European approval for use as a non-stimulant drug for attention deficit hyperactivity disorder (ADHD) in children and adolescents.
Oil major were also on the rise, tracking gains for oil prices CLV5, +2.91% Shares of Italy’s Eni SpA ENI, -0.62% gained 1.9%, Norway’s Statoil ASA STL, +0.58% climbed 0.7% and France’s Total SA FP, +0.34% added 0.3%.
On the downside, shares of Volkswagen AG VOW3, -18.89% VOW, -17.45% VLKAY, -17.54% plunged 18% after the German car maker halted U.S. sales of popular diesel-powered cars and issued an apology for violating customers’ trust.
The sharp loss weighed on the German DAX 30 index DAX, +0.55% which was roughly unchanged at 9,918.
“The Dax is trailing its continental peers today, held back by a 20% drop in Volkswagen following weekend news that it cheated on emissions test results potentially leading to a massive recall and brand damage,” CMC’s Cieszynski said.
See: VW shares crater after apology in emission scandal
Another major decliner was RSA Insurance Group PLC RSA, -21.51% , which tanked 21% after Zurich Insurance Group AG ZURN, -2.33% ended takeover talks with the U.K. insurer.
Most other British stocks were higher, however, helping the FTSE 100 index UKX, +0.33% to a 0.2% gain to 6,117.67.
France’s CAC 40 index PX1, +1.25% rose 1% to 4,581.25.
Greek election: Greek politics were back in the spotlight on Monday after Alexis Tsipras and his left-wing Syriza party secured an re-election win on Sunday that sends him back to the prime minister’s seat.
“For markets, the Greek election result has a number of positive features,” said Holger Schmieding, chief economist at Berenberg in a note.
“After years of almost unprecedented crisis, the vast majority of Greeks has once again endorsed parties that are promising to keep the country in the euro even if that implies thorough and painful reforms,” he said.
Greece’s Athex Composite index GD, -0.58% was down 0.6% at 693.54.
Source: MarketWatch
