MarketPulse Europe - Trade Truce Hopes Push Stocks to 4-Month High

By Geoffrey Smith

Investing.com -- The screens are green all over Europe Monday as the threat of a trade war between China and the U.S. recedes.

President Donald Trump’s announcement via that he would put off imposing new tariffs on $200 billion worth of Chinese imports, citing “substantial” progress in talks between the two on a range of subjects from bilateral trade volumes to intellectual property rights, has lifted European stocks to their highest levels in over four months.

At 04:15 AM ET (0915 GMT), the benchmark Euro Stoxx 50 was up 1.24 points, or 0.3% at 372.48, led by trade-sensitive names such as Volkswagen (DE:VOWG_p) and Daimler (DE:DAIGn), and by a raft of banks who have slipped further out of favour in recent weeks as the growth outlook has dimmed. The Stoxx Autos and Parts sectoral index is up by 1.3%.

There are, however, plenty of outliers. U.K. housebuilders are having a shocker after reports at the weekend that the government is about to crack down on companies for sub-standard building and other practices. The sector has been one of the best performing in the U.K. for years, profiting from the generous “Help to Buy” scheme that assured rock-bottom borrowing costs for housing-related loans. Persimmon (LON:PSN) is the worst affected, down 5.9%, but Taylor Wimpey (LON:TW), Barratt Developments (LON:BDEV) and Berkeley Group (LON:BKGH) are all suffering too.

In Switzerland, pharma giant Roche (SIX:RO) is down 0.6% after making what looks like an expensive $4.8 billion bet on gene therapy company Spark Therapeutics. The offer is more than double Spark's market value at the end of last week.

In Germany, meanwhile, the Wirecard (DE:WDIG) saga continues to bubble. The newspaper Handelsblatt reported at the weekend that the short-selling ban from regulator Bafin was issued after the company itself told state prosecutors that someone was about to bribe U.K.-based journalists to put out negative reports on it, which would have rewarded short-sellers. Given that all the critical reporting on Wirecard so far has come in the Financial Times, it isn’t clear why Bafin would take the claims of the company, which has had to face repeated questions about its accounting practices over the years, at face value.

Wirecard is up 2.4% this morning but still down by a third since the FT’s reports started in February.

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