The European stocks exchanges ended the Monday trading session with gains after European Parliament elections showed that European parties are still performing well despite increasing support for the nationalists and Eurosceptics.
The pan-European Stoxx 600 rose by 0.2% to 376.78 points, after closing down 1.47% last week.
In Germany, the benchmark DAX 30 rose by 0.3% to 12,052.92 points, following a 1.9% gain last week. The French index CAC 40 was up by 0.3% to 5,335.21 points, after dropping 2.2% last week.
Initially, the Italian FTSE MIB index advanced nu 0.6%, but in the afternoon changed the trend after the information that Brussels was considering disciplinary action against Rome because of its inability to control its public debt.
Overall, trading volumes on Monday were low, as US and UK exchanges were closed.
Still, the focus of investors is the outcome of the European Parliament elections. The data showed strong support for the liberal and green parties, while the Eurosceptic groups in the UK and France retained the support they received in 2014. Pro-European parties are expected to occupy about two-thirds of seats in the European Parliament.
In short, center-right and left groups that have controlled European politics for years saw their majority slip away, and will now need to form coalitions with business-friendly centrists. Greek Prime Minister Alexis Tsipras called for early national elections after his party suffered heavy defeats in EU elections. Following the news, the Greek stocks jumped by 6.1% and were on track for their best day since early February 2016.
Trade strain continues to be the focus of investors. The US President Donald Trump on Monday put pressure on Japan in order for the balance of trade between the two countries to “clear quickly”. Trump threatened to hit car manufacturers in the country with high duties.
European government bond markets were little moved with the spread between the German 10-year bond yield, considered one of the world’s safest assets, and the Italian 10-year government bond yield little moved after initially narrowing. Spanish and Portuguese bond yields hit record lows – a sign of investor confidence after the election results. Meanwhile, the Greek 10-year bond yields dropped to a new record low and were set for their biggest one-day fall since December 2017.
Corporate stocks performance
Most sectors in Europe ended the session into the green, with carmakers growing by almost 1.5%. The automotive manufacturers gained after the news that Fiat Chrysler and Renault have started merger talks. Fiat has confirmed its desire to merge with its French rival, with the joint venture producing approximately 8.7 million cars per year and becoming the third-largest carmaker in the world.
Fiat Chrysler’s shares rose by 8% and Renault added nearly 12%. French automaker Peugeot Citroen’s shares fell more than 3% on the back of the news, making it the worst performer in the European autos sector..
The news boosted auto shares across the board, with Daimler rising by 0.5% and Volkswagen jumped by 1.3%.
Elsewhere, pharmaceutical shares were also higher, with heavyweight Novartis climbing by 1.8% and Sanofi up over 1%.
Major oil companies also contributed to the positive tone, with Total SA climbed 1.3% and Royal Dutch Shell rose by 0.8%.