Dubai:European stocks headed for their biggest increase in two months after French President Emmanuel Macron won a commanding majority in France’s weekend vote, boosting expectations of more economic reforms.
The Stoxx Europe 600 Index was up 0.68 per cent at 391.26, while the CAC 40 Index was up 0.98 per cent at 5,312.34.
“All the economic indicators are positive, so that is helping, and the Macron story has added to the sentiment,” Nadi Bargouti, managing director, head of asset management at Emirates Investment Bank told Gulf News. In other markets in Europe, the German DAX was up 0.87 per cent at 12,863.05.
In the currency markets, the pound nudged higher at just over $1.28 ahead of the formal start of negotiations on Britain’s planned exit from the European Union. The FTSE 100 in the UK was up 0.46 per cent at 7,497.71.
“We have a favourable view on European equities, and downgraded US equities. We think there will be a catch up play as they have lagged in terms of performance to US equities,” Bargouti said.
The European stocks have gained 16 per cent in the past year, compared to 24 per cent gains in the Dow Jones Industrial Average.
EIB has been reducing exposure to the US equities as they don’t see an upside. “We are gradually taking exposure in European equities. We are looking for value names,” Bargouti said.
European sentiment is that Macron, a pro-business candidate, will help rejuvenate the European economy.
“We expect the Macron reforms to transform France like the Thatcher reforms had cured the erstwhile sick man of Europe, the United Kingdom, some 35 years ago,” said Berenberg European economist Holger Schmieding.
“And like the ‘Agenda 2010’ reforms had turned Germany from one of the weakest into one of the strongest economies in Europe almost 15 years ago.” Asia had kicked off the week strongly as well with a two-week closing high for Japan’s.
-with inputs from Reuters