(Bloomberg) -- European stocks fluctuated at the open on Wednesday as investors assessed the impact of a faltering rally in Chinese shares on sectors most exposed to the world’s second biggest economy.
The Stoxx Europe 600 Index was broadly flat at 09:20 am in Paris, following Tuesday’s losses. In China, the benchmark CSI 300 Index tumbled as much as 7.4%, its biggest fall since 2020.
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Shares with a large exposure to China, such as luxury goods and miners, failed to rebound after falling sharply during the prior session when China imposed a levy on brandy from the European Union, escalating a trade dispute.
European equities hit a record high at the end of September as fresh stimulus measures from Chinese authorities boosted risk sentiment amid a growing conviction that US and euro-area interest rates would fall further in the coming months.
Now, investors are gauging whether China, which will hold a briefing on fiscal policy on Saturday, will deliver decisive measures to turn around its sputtering economy.
“What we have traded so far China is a technical rebound, now the question is whether it will shift to a structural upward trend,” said Jacques Henry, head of cross-asset research at investment firm Silex in Geneva. “
“A Chinese revival is evidently good for European stocks, since they’re from the most integrated zone,” he added, noting the strong impact on key sectors such as luxury.
Investors are also awaiting minutes from the Federal Reserve’s last policy meeting later today and fresh inflation and jobs data on Thursday for clues about the pace at which the Fed intends to cut interest rates.
Continental’s pre-close call with analysts on Tuesday should be sufficient to see relief in the shares, Jefferies writes in a note, saying there was little new information on the BMW brake provision or timing of the spinout. The stock gained 4.1%.
Aixtron fell 3.4% after Deutsche Bank cut its recommendation to hold from buy.
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