StockBeat: Europe's Stocks Roar as China's PMI Rebounds

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StockBeat: Europe's Stocks Roar as China's PMI Rebounds
Credit: © Reuters.

By Geoffrey Smith

Investing.com -- Europe’s stock markets have started the second quarter with a bang, in another emphatic reminder of how China’s economy seems to be more important than the domestic one.

At 04:15 AM ET (08:15 GMT), the benchmark Euro Stoxx 600 was at 382.74, up 3.66 points, or 1.0%.

It’s no exaggeration to say that this is all due to news from China, where the private-sector Caixin Purchasing Managers’ Index leaped to its highest since August, suggesting that the worst of the global economic slowdown could be past.

By contrast, local PMIs have again disappointed, with flash readings in France , Germany and Italy all heading lower and falling short of expectations. The flash reading for the euro zone’s PMI fell unexpectectly to 47.5, still deep in contractionary territory.

No matter: if China is recovering, it will drag Europe with it. It’s no accident that the most export-sensitive of Europe’s markets, Gernamy , is leading the pack with a rise of nearly 1.4%, with the big auto names and other cyclicals such as Covestro (DE: 1COV ) and BASF (DE: BASFN ) faring well. The Midcap DAX , made up largely of suppliers to the big names of German industry, is also up over 1%.

Elsewhere, the U.K. FTSE 100 is up 1.0%, while France’s CAC 40 is up 0.9%

On a quiet day for corporate news so far, the airlines are standing out, falling after a profit warning from EasyJet (LON: EZJ ). The U.K.-based discounter said its net loss for the first half of its fiscal 2019 year widened sharply to 275 million pounds ($358 million) and said it expected only a modest improvement in the second half. Its shares fell over 7% in early trading in London, dragging down rivals Ryanair Holdings (LON: RYA ) by 5% and Wizz Air (LON: WIZZ ) by 3%.

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