Sharp rise in sentiment in Europe helps stocks rise Reuters

Authors: Sagarika Jaisinghani and Ambar Warrick

(Reuters)-European stock markets closed higher on Tuesday after data showed that economic confidence improved significantly in June, while Adidas (OTC) boosted the German index through a share repurchase program.

The pan-European index closed up 0.3% to 456.37 points. Previous data showed that the euro zone’s economic confidence reached a 21-year high in June. Due to the steady progress of the vaccination plan, many economies reopened.

Although these data do not take into account the new Delta variant of the coronavirus, as sentiment improves, investors are pouring into industries most likely to benefit from the recovery.

Chemical stocks rose 0.9%, while auto and financial services stocks performed best.

“Only in May 2000, at the peak of the Internet boom, did we see a more positive economic sentiment than it is now… The reopening of the economy is simultaneously driving production and industry, services, and consumers to the future. Several months of optimism,” ING analysts wrote in a report.

The German stock market performed best, rising 0.9%. Adidas shares rose 2.5% to a record high after the sportswear manufacturer said it would launch a new stock repurchase program worth up to 550 million euros ($654 million).

Inflation in Germany also eased in June, quelling some concerns about increased price pressures. But the reading is still higher than the central bank’s target.

Optimism about the steady recovery of the economy has caused the European benchmark index to rise for the fifth consecutive month, but due to concerns about the delta variant of the coronavirus, it has recently been struggling to break through its historical closing high on June 16.

Travel-related European stock markets fell 0.2% after their worst trading day in more than a month, after reports that Germany may ban British travelers from entering the country. Spain has also tightened travel regulations for British tourists.

Michael Hewson, chief market analyst at CMC Markets UK, said: “There is growing concern that the race between vaccines and viruses is failing.”

Among individual stocks, French electrical parts supplier Rexel rose 4.3% after raising its sales forecast for 2021.

After Reuters reported that the German brake manufacturer and French automotive plastic suppliers Plastic Omnium and Faurecia were interested in acquiring German automotive lighting group Hella, Knorr-Bremse Group fell more than 12% to the bottom of the STOXX 600 index.

Hella soared nearly 4% due to the news.