The region’s benchmark, the Stoxx Europe 600, rose 1.5% on Monday afternoon, while London’s FTSE 100 added 2%.
This formed a stark contrast to a US technology-driven decline late last week. The Nasdaq Composite closed 1.3% lower on Friday at the end of its worst week since March, while the larger S&P 500 fell 0.8%.
UBS Global Wealth Management said the fall in US markets “raises the question of whether the time is right to sell tech stocks.”
“But we believe this move does not mark the start of a new decline in technology similar to that of March,” said Chief Investment Officer Mark Haefele. “A correction does not need to signal the end of the rally. ”
The rise in European equities came despite signs that the region’s economic recovery was faltering. A 1.2% increase in German industrial production in July disappointed economists’ consensus expectations for an increase of 4.8%.
Investors are awaiting a European Central Bank monetary policy meeting on Thursday, which could offer clues on the next steps for policymakers to support the euro area economy.
” We are waiting [ECB president] Christine Lagarde must deliver a very conciliatory message, ”said Jonas Goltermann, senior economist at Capital Economics. “This will include the release of new lower inflation forecasts. But the policy settings will likely remain unchanged for now. ”
The British pound fell sharply against the euro on Monday, losing 0.8% to € 1.1130, as fears grew that a trade deal between the UK and the EU would be sabotaged if the government to Boris Johnson was speaking out to cancel the withdrawal agreement. The pound fell a similar degree against the dollar to $ 1.3157.
The fall in the pound helped push the exporter-heavy FTSE 100 up to become the top performing major European market on Monday.
The Russian ruble weakened to its lowest level against the euro since February 2016, briefly crossing the 90 mark, after Germany raised the prospect of sanctions in response to the poisoning of the leader of the opposition Alexei Navalny. One euro recently bought 89.8 Rbs.
U.S. markets are closed Monday for the Labor Day holiday, but futures on the benchmark S&P 500 were slightly lower and those linked to the Nasdaq 100 were down 1%.
Strategists said the strong performance of European stocks proves some investors are opting for stocks in economically sensitive sectors amid the risk of further lows for tech giants.
“Last week’s sale was very industry specific,” said Georgina Taylor, fund manager at Invesco. “It’s a sign of rotation [into non-tech stocks] but the question is how long does the push last. “
Chinese stocks accelerated their losses towards the close of markets. The mainland’s CSI 300 index of shares listed in Shanghai and Shenzhen fell 2.1 percent and the Hong Kong Hang Seng index fell 0.4 percent.
Hong Kong-listed shares of the SMIC fell 23% after Reuters announced that the Trump administration was considering adding the Chinese chipmaker to a trade blacklist. Fears that other companies might be overshadowed by bullish economic data next time around: Chinese exports rose more than analysts’ expectations in August, pushing the trade surplus to its highest level this year.
Elsewhere in the Asia-Pacific region, Japan’s Topix fell 0.4 percent while Australia’s S & P / ASX 200 added 0.3 percent. Shares in Tokyo were led lower by SoftBank, which slipped more than 7% after it was revealed on Friday that the Japanese conglomerate had spent billions of dollars buying stock options on individual US tech stocks.
Oil prices fell to their lowest level in more than a month after Saudi Aramco said on Sunday it would cut prices for crude shipments to Asia. Brent, the international benchmark, fell 1.7% to $ 41.93 per barrel.