Global stocks gain on EU election relief and auto shares surge
Global shares climbed on Monday as investors snapped up automaker stocks following confirmation of merger talks between Fiat Chrysler and Renault, and after pro-EU parties kept a firm grip on power in elections to the European Parliament. The pan- European STOXX 600 added 0.23% with all major European indices in the black, although trading volumes were thin with markets closed for public holidays in the United States and Britain.
The MSCI world equity index, which tracks shares in 47 countries, was ahead by 0.06%. Auto stocks climbed 1.6% as Italian-American carmaker Fiat Chrysler confirmed it had made a “transformative merger” proposal to French peer Renault in a deal which would create the world’s third-biggest carmaker. Shares of both companies surged. Markets were also buoyed by provisional results from the EU elections that showed liberals and Greens matching a surge by eurosceptic parties, which took a quarter of seats but failed to dramatically alter the balance of power in parliament.
Stéphane Barbier de la Serre, macro strategist at Makor Capital Markets, said investors may add more cash to euro zone stocks after the election results. But he cautioned that bigger headwinds facing the regional and global economy, such as trade wars and Brexit, were likely to limit the size and pace of inflows.—VoM