Europe open: Shares start on positive note; Eyes on EZ PMI data

European shares started 2024 in the green as optimism over potential rate cuts this year boosted optimism, while investors also looked ahead to eurozone manufacturing data.

The pan-regional Stoxx 600 index was up 0.31% at 480.51 with all major bourses higher despite a weak Asia session.

“Whether markets can continue the momentum of a strong year-end rally remains to be seen, but the early indications give some cause for optimism,” said Richard Hunter, head of markets at Interactive Investor.

“Expectations of lower interest rates and a soft economic landing in the US helped propel the main indices to a positive flurry in December, such that the Dow Jones index finished the year ahead by 13.7%, the S&P500 by 24.2% and the Nasdaq by a storming 43.4%.”

“The stage is set for further gains, certainly in terms of historical trends which suggest that the momentum could spill over into January, but the initial tests of investors’ mettle will come thick and fast during the month.”

In economic news, two closely watched surveys covering China's manufacturing sector showed a divergence in economic activity in December, with official government figures pointing to a continued contraction and a Caixin Global report indicating a pick-up in growth.

The manufacturing purchasing managers' index (PMI) from the National Bureau of Statistics declined to 49 last month, from 49.4 in November.

In contrast, the Caixin manufacturing PMI rose to 50.8 from 50.7 in November, ahead of the consensus estimate pointing to a slowdown to 50.4. While growth remains marginal, this was the fourth positive reading in the past five months.

In equity news, shares in Maersk rose after the Danish shipping giant said it still intended to sail more than 30 container vessels through the Suez Canal and the Red Sea, despite an attack on one of its ships in the region.

The company on Sunday paused all Red Sea sailings for 48 hours after Iranian-backed Houthis tried to board its Maersk Hangzhou vessel. In response, US military helicopters were scrambled and 10 militants were killed and their boats sunk.

Germany's Hapag-Lloyd was also up, although on Friday said it had decided to continue diverting its vessels away from Suez and the Red Sea for security reasons, taking the longer route via the Cape of Good Hope. An update was expected from the company on Tuesday.

Reporting by Frank Prenesti for Sharecast.com