European shares lifted by US tax reform, Brexit optimism

on Dec 4, 2017

European shares began the week in the green, as investors were buoyed by progress on US tax reforms. Optimism over Brexit negotiations, which are set to reconvene this week, also proved supportive.

By 1250 BST, the EUROSTOXX 600 was trading 1% higher, while the EUROSTOXX 50 was up 1.2%. The regional bourses were equally upbeat. The German Dax moved 1.42% higher, the CAC 40 gained 1.1% and the Spanish IBEX was up 1.3%.

Politics supports investor sentiment

As the US tax reform bill cleared another hurdle over the weekend, investors were positive on the eventual benefits for some sectors and European listed businesses.

Meanwhile, continued signs of a breakthrough in divorce discussions between the UK and EU as negotiations re-start this week, was also considered supportive.

The banking sector, which will likely be a significant beneficiary of the new US tax bill, was well bid, Monday.

BNP Paribas shares rose 2.12% to €64.17, HSBC shares were 0.36% in the green at £732.40 and Banco Santander shares gained 0.64% to trade at £490.35.

Car makers, who are also well exposed to the US market, made gains, too. Those sector gains were led by a 3.33% rise in Italian listed, Fiat Chrysler. Shares in Peugeot, Renault, BMW, Daimler and Volkswagen were all trading between 0.5% and 2.2% higher.

Meanwhile, shares in Danish insurer Tryg, gained just under 4% after agreeing a deal to buy rival Alka Forsikring.

Not all good news

Despite the upbeat tone among investors Monday, some shares lost ground.

The big faller of the day so far was Dialog Semiconductor, shares in which were 19.2% lower at €25.23. Investors sold the stock on news Apple, one of it’s biggest customers, was considering making its own chips.

The chipmaker said it didn’t anticipate any such move would impact its 2018 orders, however.

And, shares in Prysmian, slid 2.95%, on news of a deal to pay $30 per share in cash for rival General Cable.