European shares rebound after Biden drop out

European shares rose on Monday, rebounding from steep losses in the previous session, as investors assessed the implications of US President Joe Biden’s decision to exit the presidential election race.

The pan-European STOXX 600 index gained 0.9 per cent as of 08:47 GMT, snapping its longest losing streak in nine months.

Most sectoral indexes were higher, with construction and materials up 1.3 per cent. Swiss heating and ventilation solutions maker Belimo jumped 12.8 per cent after raising its sales forecast.

Investors evaluated the impact of Biden’s endorsement of US Vice President Kamala Harris as his party’s candidate.

Richard Flax, chief investment officer at Moneyfarm, noted: “a Trump-Vance ticket was potentially difficult for European equities given the America-first agenda. If there’s a marginal increase in the prospect of a Democratic victory, it would be a positive for European equities.”

Political uncertainties in the United States and the prospects of US trade restrictions caused a selloff in technology stocks last week, resulting in the benchmark index logging its biggest weekly decline of 2024. A lack of policy direction from the European Central Bank (ECB) also added to investor concerns.

“Investors are perhaps taking stock and don’t necessarily want to make aggressive moves; however, the outlook for monetary policy is still a meaningful driver,” Flax further said.

Among other stocks, Ryanair fell 12.5 per cent after the budget airline reported a 46 per cent drop in quarterly profit and missed estimates, dragging the travel and leisure sub-index down 0.8 per cent. Peer EasyJet fell 6.5 per cent.

Varta plummeted 67 per cent after the German battery maker said it was discussing two restructuring scenarios that could potentially lead to Porsche taking a stake. Rentokil Initial gained 10.8 per cent following a report that former BT chief Philip Jansen is in talks to buy the British pest-control firm.

FinecoBank added 7.2 per cent after Swiss insurer Zurich Insurance Group said it was studying a potential deal for the Italian online bank, according to the daily Il Messaggero. The banking sector rose 1 per cent.

Attribution: Reuters.