Europe Markets

European markets close higher as recovery hopes persist despite geopolitical tensions

Key Points
  • IMF Chief Economist Gita Gopinath cautioned Tuesday that “the forthcoming June World Economic Outlook Update is expected to show negative growth rates even worse than previously estimated.”
  • Tensions escalated along the Korean peninsula Tuesday after North Korea reportedly destroyed a liaison office with the South.

European stocks closed higher on Wednesday as optimism persisted over a potential economic recovery, while markets also kept an eye on geopolitical tensions.

The pan-European Stoxx 600 provisionally closed up around 0.7%, with healthcare stocks adding 1.8% to lead gains as most sectors and major bourses ended in positive territory. 

European market sentiment is bucking the trend seen in Asia overnight, where stocks traded lower following warnings from the International Monetary Fund (IMF) and on concerns surrounding geopolitical flare-ups between neighboring countries in Asia.

IMF Chief Economist Gita Gopinath cautioned Tuesday that "the forthcoming June World Economic Outlook Update is expected to show negative growth rates even worse than previously estimated."

Tensions escalated along the Korean Peninsula Tuesday after North Korea reportedly destroyed a liaison office with the South. Afterwards, South Korea's presidential Blue House said Wednesday that it would no longer accept unreasonable behavior by North Korea, Reuters reported.

Meanwhile, Indian and Chinese troops have clashed again this week in the latest of a series of recent clashes in a contested Himalayan border area, with a skirmish late on Monday leading to casualties for the first time in more than four decades. 

Investors in Europe will also be keeping up to date with the latest coronavirus news. The number of confirmed coronavirus cases around the world has now topped 8 million. The World Health Organization has warned that while the virus has slowed in parts of Europe it is gaining speed in other parts of the world, including parts of Africa and the Americas. A new cluster of cases in Beijing is also being watched closely.

Some good news came on Tuesday after Oxford University scientists announced that Dexamethasone, a cheap and widely available steroid, was proven to save lives when given to patients with severe cases of Covid-19.

Biggest movers

In terms of individual share price action, British energy company SSE climbed 9.4%after beating annual pre-tax profit expectations.

At the other end of the European blue chip index, Belgian retailer Colruyt fell 5.3% after sales growth for the 2019/20 financial year came in below expectations.