European shares scale one-month highs as Biden wins U.S. election

(Reuters) – European shares jumped on Monday to their highest in nearly a month as a victory for Joe Biden in the U.S. presidential election raised hopes of better trade ties with Washington, while chipmaker Infineon rose on a strong revenue forecast.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, November 6, 2020. REUTERS/Staff

The pan-European STOXX 600 gained 1.6%, with trade-reliant German shares adding 2%.

The European autos subsector surged 2.8% to its highest since February, while the travel and leisure index hit a five-month high.

Japan’s Nikkei share average hit a 29-year high, while futures tracking the U.S. S&P 500 index hovered just below record highs as investors bet a Biden presidency and a potentially Republican-held U.S. Senate would lead to fewer industry reforms and more monetary stimulus.

“With Biden in the White House, relations with key trade partners are likely to improve,” said Milan Cutkovic, a market analyst with Axi.

“Stimulus talks are also likely to resume soon in the United States, and the European Central Bank could announce new measures as early as December.”

With gains of about 9% so far this month, the benchmark STOXX 600 is already on course for its best month so far in 2020, although surging coronavirus cases across the continent pose a significant risk to the broader rally.

Investor attention has also been on Brexit trade talks, with Britain saying it was open to a “sensible” compromise on fishing and that there was goodwill on both sides to progress towards a trade deal.

The export-heavy FTSE 100 rose 1.5%, while the British mid-cap index – considered a barometer of Brexit sentiment – added 1.5% to touch a five-month high.

Germany’s DAX rose to a more than two-week high after September export data came in above expectations.

“Exports (and industrial production) could still prevent the economy from falling into a second lockdown depression in the final quarter of the year,” Carsten Brzeski, global head of macro at ING, wrote in a note.

In company news, German chipmaker Infineon gained 3.1% as it forecast a nearly 23% jump in revenue in the year ahead.

British homebuilder Taylor Wimpey surged 11.2% to the top of the STOXX 600 after saying it was set to deliver annual results towards the upper end of expectations as the housing market recovered quicker than expected from a coronavirus-led slump.

Industrial, consumer discretionary and financial stocks provided the biggest boost to the benchmark STOXX 600 in morning trading.

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