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China stimulus hopes, chip stocks push European shares higher

Reuters Beijing
Updated: 16-08-2019 14:58 IST
China stimulus hopes, chip stocks push European shares higher

Image Credit: Flickr

European shares churned higher on Friday, boosted by positive investor sentiment after China hinted of plans to spur economic growth while chipmaker stocks in the region propped up markets, helped by solid earnings news from U.S. counterparts. China's state planner said it will roll out a plan to boost disposable income this year and in 2020 to encourage consumption as the economy slows.

The pan-European STOXX 600 index was 1.1% higher by 0859 GMT, with the export-reliant DAX index outperforming. Markets were jarred earlier after London's FTSE 100 had a delayed open due to a technical glitch. But the index climbed 0.7% higher, boosted by financials.

European shares staged a comeback from six-month lows hit during the previous session, after China warned of retaliation against U.S. tariffs, heightening fears of the continued impact of their trade war on global growth. However, the benchmark index was still on pace to log a third straight week of losses as worries of a global recession kept investors on edge, largely because of the trade drama.

"The real kind of fear that markets were feeling seems to have somewhat disappeared, but if you look at how much ground has been lost in the last couple of days, it's very much down in the week," CMC Markets analyst David Madden said. Central banks from major economies around the world including Australia, New Zealand, and India have cut borrowing costs to spur economic growth with market participants expecting the European Central Bank to step in line with them.

Leading the charge on the STOXX 600 was a rally in semiconductor companies, which pushed the technology sector up 1.4% - with AMS, Infineon Tech and STMicroelectronics making substantial gains. Better-than-expected results from gaming chipmaker Nvidia and chip gear maker Applied Materials overnight reinforced the rally.

Italy's blue-chip index rose 1.2%, catching up with its peers after a midweek holiday on Thursday. Specialty chemicals company IMCD slumped 18% to the bottom of the STOXX 600 after it reported weaker-than-expected organic sales in the second quarter.

Also Read: China stocks end week higher, bolstered by consumer gains

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)