LONDON/FRANKFURT: European stocks rallied Thursday on expectations U.K. voters will choose to stick with membership in the European Union.
The Stoxx Europe 600 SXXP, +1.47% popped up 1.5% to 346.34, its strongest close since May 31, according to FactSet data. It was the fifth consecutive rise for the pan-European index. All sectors gained ground, led by financial SXFR, +2.18% telecommunications and oil and gas shares SXER, +1.91%
AP Moller-Maersk A/S MAERSKB, +11.87% shares stood out, rallying 11.9% after the container-shipping company said it’s asked its board to look into “strategic and structural options”. Maersk said Chief Executive Nils Andersen is stepping down, to be replaced by Maersk veteran Soren Skou.
Poll push: The Stoxx 600 extended gains intraday after the most recent poll from Ipsos Mori for the Evening Standard newspaper showed the “remain” camp swinging to a lead of 52%, compared with 48% of respondents who backed the “leave” side.
Analysts also cited reports from bookmakers who saw heavy betting on a “remain” victory.
“Not only are the polls pointing to a victory for remain, the betting odds, which have previously been a far better barometer of the eventual voting, are now strongly in favor of remain, with an implied probability of above 80%,” said Craig Erlam, senior market analyst at Oanda, in a note.
Still, “I would possibly have expected to see investors a little more conservative given that the vote is far from guaranteed,” he said.
Analysts have said a Brexit would rock European and British markets as a U.K.-EU breakup would spark uncertainty about regional economic growth and a range of issues surrounding trade, labor and immigration issues.
Separately, an online survey from Populus put the “remain” camp at 55% compared with 45% for the “leave” side.
“There remains a large number of undecided voters and while these may be more likely to vote for the devil they know, I think the markets may well be writing off the possibility that they don’t a little too much,” he added.
Ipsos Mori noted that 12% of survey respondents said they could change their mind about their stance on Brexit before they cast their ballot.
The Stoxx 600 marked its last run of five straight gains in late May. The index on Wednesday closed up 0.4%.
The United Kingdom’s exit from the European Union would mark a reversal in the global trend toward greater economic integration.
The financial sector in particular has been in focus in the run-up to the referendum, as many British banks relying on passporting rules to easily conduct business within the bloc. Shares of London-based Barclays PLC BARC, +2.72% BCS, +4.39% and HSBC Holdings PLC HSBA, +2.35% HSBC, +3.31% climbed 2.7% and 2.4%, respectively.
Meanwhile, Italy’s Banca Popolare di Milano PMI, +5.64% gained 5.6% while German lender Deutsche Bank AG DBK, +3.73% beefed up by 3.2%. Spain’s Banco Popular Español SA POP, +0.14% turned higher to end up 0.1%.
The U.K’s FTSE 100 UKX, +1.23% leapt 1.2% to 6,338.10, a two-month high.
Indexes: Germany’s DAX 30 DAX, +1.85% gained 1.9% to 10,257.03 and France’s CAC 40 PX1, +1.96% popped up 2% to 4,465.90.
Italy’s FTSE MIB I945, +3.71% surged 3.7% to 17,820.32, while Spain’s IBEX 35 IBEX, +2.11% picked up 2.1% to 8,885.30.
Currencies: The British pound GBPUSD, -9.5536% touched $1.495, it’s highest since late December, after the Ipsos Mori poll. Sterling eventually drifted back to around $1.4820. The pound fetched $1.4691 late Wednesday.
Sterling overnight hit a six-month high above $1.48 after two Brexit polls released late Wednesday showed the “remain” side with a lead over the “leave” camp.
“The market is priced towards the U.K. remaining in the EU, but not fully. Should we see this come to pass, then the [pound] will breathe a decent sigh of relief,” said Simon Smith, chief economist at FxPro, in a note.
“For cable, this could see a move up to the $1.53-$1.54 level. A vote to leave would be a more complex scenario. Cable could easily move down to the $1.32-$1.33 area initially,” he added. Cable refers to the pound/U.S. dollar pair.
The euro against the pound EURGBP, +6.5704% fetched 76.61 pence, compared with 76.82 pence late Wednesday. The shared currency EURUSD, -3.5575% changed hands at $1.1360, up from $1.1296 late Wednesday.
