Europe Stocks Rise for 5th Day as Britons Vote on EU Membershipby
U.K. benchmark FTSE 100 Index has erased monthly declines
France’s CAC 40, Italy’s FTSE MIB among best performers
European equities extended their rally into a fifth day as U.K. voters headed to polls to decide whether to stay or leave the European Union.
The Stoxx Europe 600 Index rose 1.5 percent at the close of trading, as two polls conducted before Thursday showed a lead for the campaign to keep Britain in the European Union. Bookmaker Paddy Power Betfair Plc said Thursday that the odds on a “Remain” vote had shortened to a 1/12 chance, indicating a 92 percent probability.
All industry groups in the Stoxx 600 climbed. The gauge is set for its best week since 2011. Britain’s benchmark FTSE 100 Index advanced 1.2 percent. Polling stations opened at 7 a.m., and voters have until 10 p.m. to cast their ballot. The first results are expected around midnight, while the final ones are due at about 7 a.m. on Friday.
“Some cash is returning to markets, but I would rather stay put until the results,” said Thomas Thygesen, SEB AB’s head of cross-asset strategy in Copenhagen. “Most people are sidelined. The issue will be how the outcome is perceived and how the biggest stakeholders react. Even just the absence of bad news may be the start of a risk rally, and markets have been rising in the anticipation of this. You can’t really rule anything out before tomorrow.”
It’s been a wild ride in the past few weeks, with European shares falling to their lowest levels since February before rebounding 7.8 percent in the five days through Thursday. The Stoxx 600 closed 1.3 percent below its April 20 high, with a valuation of about 15 times estimated earnings that was more than 10 percent lower than that of the S&P 500 Index. On Thursday, the number of shares changing hands was about 25 percent greater than the 30-day average.
In the run-up to the referendum, U.K. stocks have benefited from a weakening of the pound and rebound in miners, and the FTSE 100 has become the best performer among major western-European equity gauges this year. After slumping as much as 4.9 percent in June, it erased its monthly losses and is now 1.7 percent higher. The British index is up for the year, while the Stoxx 600 is still down 5.3 percent.
European firms have expressed concerns about uncertainty ahead of the vote. Data today showed that even though euro-area manufacturing expanded at a faster-than-expected pace in June, growth for the services industries fell short of forecasts. An index for both sectors slipped to 52.8 from 53.1 in May, London-based Markit Economics said, the lowest level since January 2015.
Still, most western-European markets were up on Thursday, with benchmark gauges of Germany, France and Italy rising more than 1.8 percent. Banks led gains among Stoxx 600 industry groups.
Among stocks moving on corporate news, paper company DS Smith Plc jumped 6.6 percent as it said its revenue and profit grew. Nordea Bank AB slid 6.1 percent after JPMorgan Chase & Co. cut its rating on the stock.