European stocks climb as easing China curbs boost risk sentiment

European stocks climb as easing China curbs boost risk sentiment

Stocks















Bloomberg

European equities rose to the highest level in more than three weeks, trimming their monthly drop, after China relaxed some of the strictest virus controls of the pandemic, fuelling risk-on sentiment for economic recovery.

The Stoxx 600 advanced 0.7% at 9:44 am in London, rising for a fourth day in the longest winning streak since March. Consumer and technology sectors were among the biggest gainers.

European stocks have been under pressure this year amid a flurry of concerns spanning hawkish central banks, slowing growth, soaring prices and the war in Ukraine. Dip buyers stepped into the market last week as cheaper valuations and still robust earnings outlooks fuelled appetite for equities.

Adding to positive sentiment, Chinese authorities relaxed some Covid-19 restrictions and moved to stimulate country’s faltering economy.

A reopening of China’s economy would lead to fewer economic concerns through easing supply bottlenecks and cooling commodity prices, according to Ulrich Urbahn, head of multi-asset strategy and research at Berenberg.

The equity rally can continue if volatility declines further and inflation surprises to the downside, he said. “The risk remains that inflation is stickier than many investors think,”

Urbahn said.

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