European stocks climb as UK general election takes center stage

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on Jul 4, 2024
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  • European stocks climb, with Stoxx 600 up 0.6%, led by banks and automotive stocks.
  • U.K. general election garners attention, with Labour Party poised for a significant win.
  • Asia-Pacific markets and U.S. S&P 500 show positive trends amidst cautious investor sentiment.

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European stocks closed higher for a second consecutive session on Thursday, as investors shifted their focus to the UK’s general election.

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The regional Stoxx 600 index provisionally closed up 0.6%, with banks rising 1.3% to lead the gains. Most sectors and major bourses traded in positive territory.

German manufacturer Continental AG surged 9.5%, topping the index after Citi analysts upgraded the stock to a “buy” rating.

The upgrade was bolstered by anticipated tailwinds for Continental’s automotive division in the second quarter, indicating strong performance ahead.

In a similarly positive move, meal-kit firm Hellofresh climbed 10%, bringing its weekly gains to nearly 33%.

JP Morgan removed the stock from its Negative Catalyst Watch, citing stabilizing meal-kit trends in North America as a key factor for the optimistic outlook.

UK general election captures political attention

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As the UK general election unfolded on Thursday, polling stations remained open from 7 a.m. to 10 p.m. local time. Pre-election voter surveys suggested a substantial victory for the center-left Labour Party, potentially ending 14 years of Conservative Party rule.

The political landscape has investors closely watching for any shifts that could impact the market.

In the bond market, yields on UK government bonds, known as gilts, were slightly higher by midday in London.

The two-year yield rose two basis points to 4.182%. Meanwhile, the British pound remained nearly flat against both the US dollar and the euro, indicating cautious investor sentiment amid the electoral process.

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Overnight, Asia-Pacific markets saw positive movements, with Japan’s Topix crossing its all-time high of 2,886.50, previously set in December 1989.

This historic milestone underscores the robust performance of Japanese equities amidst a global market upswing.

In the US, the S&P 500 rose to new highs during Wednesday’s shortened trading session. Investors appeared to shrug off sluggish economic data, maintaining an optimistic outlook.

Trading volume was muted on Wednesday, as the New York Stock Exchange closed early at 1 p.m. ET in observance of Independence Day. The exchange remained shut on Thursday for the holiday.

European market dynamics and absence of major earnings reports

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Despite the broader market gains, there were no major European earnings or data releases on Thursday.

This lack of significant news allowed investors to focus primarily on the political developments in the UK and their potential implications for the market.

Analysts continue to monitor the evolving economic landscape, with particular attention to inflation trends and central bank policies.

The Federal Reserve’s recent minutes indicated a cautious approach to interest rate cuts, adding a layer of complexity to the market outlook.

IEuropean stocks closed higher for the second straight session, driven by gains in banking and automotive sectors. Continental AG and Hellofresh were standout performers, thanks to favorable analyst upgrades and market trends.

The UK general election captured significant attention, with potential political shifts on the horizon. Meanwhile, positive trends in Asia-Pacific markets and new highs in the US S&P 500 reflected a broader global market optimism.

Citigroup EUR JPMorgan Chase & Co UK Europe Stock Market