European stocks rose as a drop in bond yields and optimism about China considering fresh stimulus helped equities recover from their downbeat start to the week as investors continue to assess geopolitical risks from the Israel-Hamas war.
(Bloomberg) — European stocks rose as a drop in bond yields and optimism about China considering fresh stimulus helped equities recover from their downbeat start to the week as investors continue to assess geopolitical risks from the Israel-Hamas war.
The Stoxx Europe 600 Index was up 1.5% by 10:20 a.m. in London. Basic resources stocks lead the gains and luxury companies including LVMH also got a boost after Bloomberg News reported that the Chinese government is mulling unleashing a new round of stimulus to boost the economy. Dovish remarks from top Federal Reserve officials added to the improved risk appetite.
Among individual movers, EasyJet Plc shares gained following comments in French newspaper Les Echos from its chief executive officer that it benefited from a resurgence in travel demand. Ubisoft Entertainment SA fell following a video game delay.
October had been shaping up to be a lackluster month for European equities as the Middle East conflict heightens geopolitical risks, with the benchmark gauge little-changed on the month as investors also mull the impact of high rates and a sluggish Chinese economy.
Frédérique Carrier, head of investment strategy for RBC Wealth Management in the British Isles and Asia, said that while European equity valuations are looking especially attractive following six months of underperformance, concerns remain over a weaker backdrop.
“Despite this very attractive valuation, we continue to recommend an underweight for European equities because we think that this weakening of the macro environment is not yet reflected in earnings, which are at risk of headwinds and downgrades,” RBC Wealth Management’s Carrier said by phone. “And that would really limit the region’s ability to outperform.”
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–With assistance from Sagarika Jaisinghani.
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