European shares rose sharply yesterday as weak data in Europe and elsewhere reinforced expectations the broad monetary policy backdrop will remain equity-friendly, with Glencore and ArcelorMittal lifting the mining sector.
The pan-European FTSEurofirst 300 index ended up three per cent and the eurozone’s blue-chip Euro STOXX 50 climbed 3.3 per cent. Both had fallen on Friday before WallStreet rebounded to end in the black.
Eurozone business activity grew at its weakest pace in four months during September, surveys showed yesterday.
“Data today is moderately negative for equities but their impact is practically neutral because of growing expectations that easing monetary policies in various countries will continue or be expanded,” said Marco Vailati, head of research at Italy’s Cassa Lombarda.
He added retail sales were positive as they confirmed Europe’s economy was growing.
US stocks rose yesterday, with the S&P 500 up for the fifth day, after last week’s disappointing jobs report hardened views that the Federal Reserve won’t raise interest rates this year.
France’s CAC outpaced the rest of Europe with a gain of 3.5 per cent following a report showing services activity accelerated in September more than previously thought, a sign that the eurozone’s second-biggest economy finished the third quarter on a firm footing.
“The economic data in France was today’s surprise,” said Andrea Cuturi, chief investment officer at asset manager Anthilia Capital.
“Data elsewhere in Europe was not particularly exciting. Signs of an economic acceleration in the euro zone are there, but full of traps, from China to emerging markets and local politics.”
Mining and trading giant Glencore extended its rebound from a sell-off a week ago, rising 21.1 per cent yesterday after a surge in its Hong Kong-listed shares.
Some traders said Glencore was buoyed by talk it might sell some of its agricultural assets to cut its debt.
“Sentiment is improving towards Glencore on the signs that it may be able to sell some of its assets,” said Thames Capital Markets trader Nav Banwait.