Fiat-Renault deal hints lift European shares
INTERNATIONAL - Car industry shares drove a rebound in European stock markets on Wednesday, helped by an Italian newspaper report suggesting merger talks between Fiat Chrysler and Renault have gained some traction in recent weeks.
Renault SA rose about 3 percent and Fiat Chrysler Automobiles added 2 percent after Italian newspaper Il Sole 24 Ore suggested the previously-aborted deal could be back on the table, while giving no details of its sources.
The pan-European STOXX 600 index rose 0.7 percent at 0818 GMT, with the autos index .SXAP up 1.6 percent.
Italy's FTSE MIB .FTMIB moved 1.4 percent higher, bouncing back from a drop in the previous session amid a deepening Italian political crisis.
Italian prime minister Giuseppe Conte resigned on Tuesday, potentially paving the way for a new coalition government but sentiment was soothed after Italy’s League leader Matteo Salvini said he was ready to keep the coalition government alive to approve a 2020 budget.
“What happened in Italy wasn’t really unexpected and we are seeing a correction after the negative situation yesterday,” said Rabobank quantitative analyst Bas Van Geffen.
“The fact that Italy is looking into budget negotiations so that they can submit the budget on time is partly helping sentiment.”
US President Donald Trump also said overnight that his administration was considering potential tax cuts, and sought to play down market worries that the world’s top economy could be heading for a recession.
“The main affect of Trump cutting taxes will be on USmarkets, but if the US does better, it is good for an export oriented country like the Netherlands and Germany and therefore for the rest of the Eurozone as well,” Van Geffen said.
Signs that governments and central banks are ready to step in with additional measure to boost cooling global growth have helped stock markets survive a volatile few months, but they are still on course to end August lower.
The STOXX is down 3 percent for the month, driven chiefly by fears that the slowing economic effects of a drawn-out US-China trade war and the fallout of Britain’s exit from the European Union are slowly tipping some major economies into recession.
The US Federal Reserve’s Jackson Hole Symposium starting on Thursday will be closely watched for comment by central bankers. The Fed is also due to release minutes from its last policy meeting later on Wednesday.
Among individual stocks, Capita Plc (CPI.L) rose 3.9 percent to the top of the STOXX 600 index, after brokerage Goldman Sachs upgraded its shares to “buy”
Pandora A/S gained 13.4 percent, extending Tuesday’s gains, as Chief Financial Officer Anders Boyer reported purchase of 24,400 shares of the company.Reuters