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STOXX 600 up ahead of France’s pivotal vote, German DAX holds firm above 20,000 mark
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By Joao Manuel Vicente Mauricio and Ankika Biswas
(Reuters) -Technology and automobile shares lifted Europe’s benchmark index to a near one-month high on Wednesday, while investors braced for a crucial no-confidence vote by French lawmakers that will likely oust Prime Minister Michel Barnier’s government.
The pan-European STOXX 600 index was up 0.3% at 0930 GMT, on track for its fifth straight session of gains, with France’s CAC 40 rising 0.4%. Germany’s DAX was up 0.8%, trading above the 20,000-point mark that it crossed for the first time on Tuesday.
French lawmakers will vote on no-confidence motions that, barring a last minute surprise, will oust Barnier’s government at a time when the country is struggling to tame a massive budget deficit.
The debate is due to start at 1500 GMT, with voting expected a few hours later.
If he is defeated, which looks likely, France will be weighed down by a burdensome budget deficit, while another political vacuum opens,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
If difficult decisions are put off, clouding the economic horizon, it won’t help business confidence and may limit investment and recruitment and could lead to further wariness among consumers.
On Wednesday, data showed that political uncertainty hit France’s services sector, while the euro zone’s business activity fell sharply last month but was slightly ahead of a preliminary estimate.
Among individual stocks, Vestas dropped 5% after the Danish wind turbine maker said CFO Hans Martin Smith would step down by end-2024, fuelling investor concerns.
Signify lost 4% after Barclays downgraded the stock of the lighting maker to “underweight” from “overweight”.
Meanwhile, AstraZeneca and Novartis lost around 2% each, dragging down the healthcare index, after HSBC cut the target price of the former and downgraded the latter to “reduce” from “hold”.
Leading the gainers on the STOXX 600, Hexagon jumped 7.3% after the company proposed the former CEO of ABB and Sandvik as the new vice chairman.
Hexagon’s gains, along with Dutch computer chip packaging company BE Semiconductor’s 4% rise, aided an over 1% gain in the tech sector.
Norwegian oil tanker group Frontline climbed 5% after analysts pointing to expanded U.S. sanctions on Iran.
The auto sector was the top sectoral gainer, with Stellantis rising 1% after a report said that Apple’s outgoing CFO could become the new CEO of the Italian-French carmaker. However, the company later denied these claims.
(Reporting by Joao Manuel Mauricio in Gdansk and Ankika Biswas in Bengaluru; Editing by Sonia Cheema)
The STOXX 600 Index is a stock index that represents the performance of 600 large, mid, and small-cap companies across 17 European countries, providing a broad view of the European equity market.
The DAX index is a stock market index that represents the 30 largest and most liquid German companies traded on the Frankfurt Stock Exchange, serving as a key indicator of the German economy.
Business confidence refers to the level of optimism or pessimism that business leaders feel about the overall economic environment and their own company's prospects, influencing investment and hiring decisions.
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