Europe stocks rally, but headed for worst month since 2016

European stocks got swept up in a global equity rally on Wednesday, with drug stocks and major oil companies leading the charge. However, the main index was still headed for its worst monthly performance in more than two years.

How did markets perform?

The Stoxx Europe 600 SXXP, +1.75% jumped 1.6% to 361.67, headed for its best daily return since a 2.1% pop in April 2017, after a modest move higher Tuesday. For October, the index is set for a 5.6% drop, which would mark its worst monthly performance since a 6.4% fall in January 2016.

Germany’s DAX 30 DAX, +1.65% rallied 1.5% to 11,451.35, while France’s CAC 40 PX1, +2.42% climbed 2.2% to 5,092.51. The U.K.’s FTSE 100 UKX, +1.42% was up 1.6% to 7,147.50.

The euro EURUSD, -0.2556% traded at $1.1337 from $1.13476 late Tuesday in New York. The pound GBPUSD, +0.5037% was trading at $1.2761 from $1.2707.

What drove the market?

Stocks globally seized on upbeat earnings news and shook off weak economic marketdata out of China. Downbeat economic reports had kept European stocks pinned down on Tuesday.

Headline inflation in the eurozone rose to 2.1% in September from 2.2% in October, in line with consensus, while the region’s unemployment rate was unchanged at 8.1%.

But investors have been subjected to sharp volatility over the past few weeks, with worries over trade, earnings and coming midterm elections in the U.S. weighing on sentiment. Europe’s own problems have included weak data, concerns over Italy’s budget, Brexit, and political upheaval in Germany.

What stocks were active?

Banking heavyweights led the gains, with Standard Chartered PLC STAN, +3.98% and Banco Santander SA SAN, +2.82% SAN, +1.80% up 4% and 3%, respectively, after posting upbeat results.

L’Oréal SA OR, +7.27% climbed 6.8% on a third-quarter sales beat.

Among major oil companies, strong crude prices drove a 3.3% gain for BP PLC BP, +3.96% BP., +3.63% and a 2.7% climb for Royal Dutch Shell PLC RDS.A, +2.05% RDSA, +2.32% rose 2.7% and Total SA TOT, +1.45% FP, +1.69% gained 1.5%.

What are strategists saying?

This bullish market sentiment comes despite a somewhat dour 24-hours for the global growth picture, with a fall in the eurozone GDP figure being followed up by a deterioration in a host of Japanese and Chinese economic measures,” said Joshua Mahony, market analyst at IG, in a note to clients.



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