The pan-European STOXX 600 index shut 0.7% higher
European shares ended higher on Tuesday, with China-exposed companies such as luxury giants and automakers at the helm of gains after the Peoples’ Bank of China unveiled broad stimulus measures to aid its ailing economy.
The pan-European STOXX 600 index ended 0.7% higher. The stand out regional performer with a 1.3% jump was France, which is home to a host of luxury brands.
PBC announced broad monetary stimulus and property market support measures to revive an economy grappling with strong deflationary pressures and in danger of missing this year’s growth target.
Today’s announcement has helped lift confidence, it will also support household consumption and ease debt servicing pain, economists at TS Lombard wrote in a note led by chief China economist Rory Green.
But it is insufficient to put a floor under the property market and wider economy. A substantial nominal growth slump is baked in, they added.
A gauge of European luxury firms, which rely heavily on Chinese consumer spending, were the biggest boost on the index, gaining 2.5%.
LVMH rose 3.2%, while Cartier-owner Richemont added 4.1%.
Basic resources led gains amongst the major STOXX sectors, climbing 4.4%, its biggest single-day gain in over 22 months, as base metal prices gained on improving China demand prospects.
Other China-exposed sectors like autos and industrials also added 1.1% and 0.6%, respectively.
Most local bourses closed higher, though UK’s FTSE 250 midcap index slid 0.4%, bogged down by a 6.3% decline in homeware retailer Dunelm after its top shareholder, and private investment firm sold a 4.9% stake in the company.
On the data front, German business morale dropped for a fourth consecutive month in September and by more than expected, according to a survey, adding to signs that the euro zone’s biggest economy may have tipped into recession.
Later this week, rate decisions in Switzerland and Sweden will also be on investors’ radar.
