European stocks rally most in two weeks

Bloomberg

European stocks rallied the most in two weeks, led by bank shares, on optimism that the recent selloff is overdone.
The pound strengthened on hopes that UK and European Union officials will be able to make progress as a key week of Brexit talks begins. Asian equities and US futures gained, while oil dropped below $40 a barrel in New York after a Vitol Group executive said uncertain demand could keep prices in check.
The advance in the Europe Stoxx 600 Index was broad, suggesting that investors are returning to optimism after last week, when the equity benchmark fell the most since June.
HSBC Holdings Plc surged 10% in London after its biggest shareholder raised its stake in a bet the embattled lender will return to paying dividends. ArcelorMittal SA gained as Cleveland-Cliffs Inc. agreed to buy the company’s US operations. Diageo Plc rises after saying it expects business to improve as restaurants
reopen after lockdowns.
“It is hard to become too bearish,” said Mark Dowding, the chief investment officer at BlueBay Asset Management. “As we look into 2021, growth should be stronger, policy will stay supportive with further fiscal spending. A vaccine is also expected to be deployed and life to return closer to normal by the middle of next year.
Still, global equities remain on course for the first month of losses since March, amid mounting risks to the economic recovery from fresh coronavirus waves and stalling fiscal relief in the US One of the brighter spots is China, where data over the weekend showed profits at industrial companies grew for a fourth consecutive month in August.
”There is a tremendous amount of liquidity and it will continue to help the global economy led by China and followed by the rest,” said Sebastien Galy, macro strategist at Nordea Investment Funds. “We are of the view that we remain in a buy on dip.”
At the same time, tension between Beijing and Washington continues to simmer. President Donald Trump’s ban on TikTok was temporarily blocked by a federal judge, dealing a blow to the government in its showdown with the popular
Chinese-owned app over national security concerns. China’s largest chipmaker, Semiconductor Manufacturing International Corp., sank to a four-month low in Hong Kong after the US imposed export restrictions.
In the US, Democrats and Republicans will have to pick up the pace to complete a stimulus relief package before the November 3 presidential election. While the sides remain far apart, Nancy Pelosi said there is a chance she and Treasury Secretary Steven Mnuchin can still reach a deal.
Meantime, investors were also digesting a New York Times report that President Trump paid just $750 in US income taxes in both 2016 and 2017. Trump said the story is a “total fake.”