Europe midday: Equity markets rally as Brexit fears subside for now

European stocks rose again on Wednesday as investors put their concerns about Brexit aside to snap up some bargains.

At midday, the benchmark Stoxx Europe 600 index was up 2.3%, Germany’s DAX was 1.8% higher and France’s CAC 40 was 2.6% firmer.

In London, the FTSE 100 was 2.3% higher while the more domestically-focused FTSE 250 was 1.8% stronger.

At the same time, oil prices were in the black. West Texas Intermediate was up 1.3% at $48.45 a barrel and Brent crude was 1.2% higher at $49.14.

In currency markets, the pound was trading at $1.3435 compared to $1.3341 late on Tuesday.

Rebecca O’Keeffe, head of investment at Interactive Investor, said: “Investors, who are still trying to work out whether current market levels pose and opportunity or a threat, are coming down firmly on the side of opportunity with equities across the UK and Europe up strongly for a second day.

“With global central banks all trying to reassure markets, prices are stabilising and volatility is falling. However, it is still very early in the process and significant political and market risks remain, so we may start to see some investors start to sell the rally, which could see markets pare back some of the gains.”

The UK is yet to invoke Article 50 and kick off the process of withdrawing from the EU – something a number of EU leaders are keen for it to do. Prime Minister David Cameron, who was in Brussels on Tuesday meeting with his European counterparts to discuss the issue of Brexit, said he would leave the process to his successor.

The leaders of the other 27 EU members will meet again on Wednesday without Cameron.

Analysts attributed the positive tone to the fact that Article 50 was not likely to be invoked any time soon, meaning that financial markets have some breathing space for a while.

CMC Markets’ Michael Hewson said: “With no likelihood of Article 50 of the Lisbon Treaty getting triggered any time soon it seems that the status quo isn’t likely to change in the short term, with an emergency EU Summit scheduled in September being pencilled in for a new UK Prime Minister to submit plans for next steps.

“Whilst that doesn’t remove the uncertainty with respect to the eventual outcome it also means that markets are going to have plenty of time to settle into their new found reality and equilibrium.”

In corporate news, travel and leisure stocks such as TUI and Thomas Cook were under the cosh following a terror attack on Tuesday at Istanbul’s Ataturk airport that left 36 people dead and more than 140 wounded.

Elsewhere, Bunzl was on the front foot after the distribution company said group revenue for the half year was expected to increase by 9% at actual exchange rates and 6% at constant rate, largely due to the impact of acquisitions.

Dixons Carphone was in the red despite reporting a 17% jump in profit for the year to April.

On the macroeconomic calendar, data from the European Commission showed economic sentiment in the eurozone was broadly unchanged in June.

The headline EC economic confidence index slipped to 104.4 from a revised 104.6 in May, just missing economists’ expectations of 104.7. The European Commission said the relatively flat sentiment resulted from increasing confidence in industry, the sector with the highest weight in the ESI, which offset drops in services and construction and, in particular, retail trade.

The index for the European Union nudged up 0.1 to 105.7.

The survey was carried out before the UK referendum.

Elsewhere, figures from market research firm GfK showed German consumer sentiment is set to improve next month, although uncertainty following the UK’s decision to leave the European Union could take its toll.

Its forward-looking consumer sentiment indicator rose to 10.1 going into July from 9.8, beating expectations for it to remain unchanged.

Meanwhile, the economic expectations sub-index rose 9.7 points to 18, marking the third increase in a row and the highest level since June 2015.

Still to come, US personal income and spending is at 1330 BST and US pending home sales are at 1500 BST.