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Zurich - The optimism that swept through European equities entered a second day as lenders and carmakers further rebounded, while investors bet on additional central-bank stimulus.
The Stoxx Europe 600 Index climbed 2.9% at 10:05 a.m. in London, taking its two-day gain to 5.9%, the most since 2011. Italian and Greek lenders led a bank rally, while the region’s automakers advanced, helped by a weakening euro.
Further boosting sentiment were bets for increased central- bank stimulus after data showed a slide in Chinese exports in January was eclipsed by an even bigger tumble in imports, leading to a record trade surplus.
Those helped the Shanghai Composite Index fall just 0.6% after reopening following a week-long holiday, while the yuan jumped as People’s Bank of China Governor Zhou Xiaochuan voiced support for the currency and set its fixing at a one-month high.
Investors are now waiting to hear from European Central Bank President Mario Draghi, who will address lawmakers in a two-hour testimony on Monday.
“It’s a catch-up for the European sector that had been crushed since the start of the year,” said John Plassard, senior equity-sales trader at Mirabaud Securities in Geneva.
“The Chinese market didn’t react as bad as we feared, and with the weak export data there is some big hope that he central banks will react quite fast. We may hear something from Mario Draghi as early as this afternoon.”
Standard & Poor’s 500 Index futures expiring in March also rose, up 1.3%. US markets are closed for a holiday on Monday.
European equities rallied the most in three weeks on Friday, after hitting their lowest prices since 2013, as banks, miners and energy producers surged at least 5.5%. Lenders have been particularly hit in the rout that took $8.4trn from global equities this year and the Stoxx 600 down as much as 17%. The index reached a valuation of 13.9 times estimated earnings on Friday, down from 17.4 in April, after a gauge tracking volatility expectations climbed to the highest level since August.
Despite the rout, strategists are largely bullish. They’re projecting a Stoxx 600 rebound of 23 percent from Friday through the end of the year on signs of an improving economy amid continued European Central Bank stimulus.
Benchmark stock indexes of Italy, Spain, Greece and Germany rallied more than 2.5% on Monday. Those all lost more than 16% this year through Friday, becoming some of the world’s worst performers among 93 equity indexes tracked by Bloomberg.
Greece’s Eurobank Ergasias SA and Alpha Bank SA surged more than 13%, while Italy’s Banca Monte dei Paschi di Siena SpA 8.2% after hitting record lows last week. Danske Bank, which this year surpassed Deutsche Bank AG in market value, advanced 5.5% after renewing a pledge to retail clients that they won’t foot the bill for Denmark’s negative interest rates.
The German lender and Credit Suisse Group AG, which also tumbled to the lowest ever, rebounded at least 2%, while HSBC Holdings rose after said it will keep its headquarters in the UK despite considering a relocation to Hong Kong.
Reckitt Benckiser Group gained 6.2% after the maker of Durex condoms and Nurofen painkillers reported fourth- quarter sales growth that beat analyst estimates as retailers stocked up on cold and flu remedies. Hennes & Mauritz AB added 2.9% after reporting a rise in January sales.
E.ON SE and RWE AG gained more than 2.8% after people familiar with the matter said German lawmakers signalled they’re willing to have taxpayers share some of the expenses for disposing of nuclear waste. Engie SA rose 2.1% after a report that its incoming chief executive officer is planning as much as €20bn ($22bn) of disposals.
LafargeHolcim added 5.2% after a report that JSW Group chairperson Sajjan Jindal said the company is in talks to buy Lafarge India assets.
