European stocks continued their rally on Tuesday, extending their gains for a second consecutive day as risk appetite continued to return to the markets.
All of continental Europe’s major bourses ended higher by more than 1%, with stocks in Italy and Spain seeing gains of more than 2%. The only major index on the continent to finish lower was Britain’s blue-chip FTSE 100, which lost a sole basis point on the day, dragged lower by a strengthening pound
The FTSE, which is disproportionately filled with companies that denominate their assets in dollars, has benefited from the pound’s weakness in the aftermath of the UK’s vote to leave the EU, and has gained more than 6.5% since June 23rd, the day of the vote.
However, on Tuesday sterling gained more than 1.7% as it benefited from a little bit of stability returning to UK politics after prime minister David Cameron confirmed that he will be replaced by Home Secretary Theresa May on Wednesday evening. The announcement came after May’s only rival for the Conservative party leadership, Andrea Leadsom, pulled out of the race.
As a result, the FTSE could not keep pace with the rest of the continent’s equity indexes. Here is the chart of the FTSE’s performance on the day:
In the broader European markets, there were gains across the board, with Italy’s FTSE MIB shining, thanks to a big rally in banking stocks after Italy’s biggest lender UniCredit sold a €328 million stake in online lender FinecoBank to shore up its capital base. That news gave a boost to the whole of the Italian equity market, with the MIB higher by almost 2.8%. Here is how that looked:
Elsewhere, all the continent’s major indexes ended up more than 1%, while peripheral equity markets gained between 0.3% and 1%. Here is how things looked at the close:
Across the pond in the USA, stocks are also charging and are at all-time highs for the first time in over a year.
The Dow Jones Industrial Average rose above its previous closing and intra-day peaks in early trading on Tuesday, one day after the S&P 500 closed at a record.