European Shares Begin Year on positive note

European shares rose in the first trading session of 2023 on Monday as euro zone manufacturing data suggested the worst had passed after a year marred by fears of a recession as central banks hiked rates globally.

The pan-regional STOXX 600 (.STOXX) rose 1.0%, supported by consumer discretionary stocks.

The automobile and parts sector (.SXAP) gained 3.2% and luxury names like LVMH (LVMH.PA) and Kering (PRTP.PA) added about 2% each.

“With 10-year bund yields above 2.50%, relaxed year-end trading and the probable drop in HICP inflation are raising hopes for an upbeat start into the year,” Commerzbank Research analysts said in a note, referring to euro zone consumer prices inflation data due later this week.

An early indicator was data showing the downturn in euro zone manufacturing activity has likely passed its trough as supply chains begin to recover and inflationary pressures ease, leading to a rebound in optimism among factory managers.

The STOXX 600 ended 2022 with sharp losses, driven by central banks’ aggressive policy tightening to rein in soaring prices, an economic slowdown, the Russia-Ukraine conflict that fanned inflationary pressures, and growing concerns over COVID cases in China.

Reuters/Hauwa Abu