PARIS (Reuters) – Major European stock markets rose in early trading on Monday after a sharp weekly decline as two unexpected announcements were scrutinized by markets: the surprise reduction in key interest rates in China and Joe Biden’s withdrawal from the race for the U.S. presidential election in November.

In Paris, at around 07:45 GMT, the CAC 40 gained 0.57% to 7,577.37 points after a loss of 2.45% over the whole of last week. In London, the FTSE 100 gained 0.39% and in Frankfurt, the Dax gained 0.33%.

The EuroStoxx 50 index rose by 0.70% and the FTSEurofirst 300 by 0.48%. The Stoxx 600, which suffered a weekly decline of 2.76% – the largest since the beginning of the year – rebounded by 0.58% on Monday.

Futures contracts on Wall Street predict a rise of 0.05% for the Dow Jones, 0.27% for the Standard & Poor’s 500 and 0.51% for the Nasdaq after a drop on Friday linked in particular to a giant computer failure which affected many sectors of the economy.

Investors are digesting these two weekend announcements before an avalanche of results from American stock market heavyweights such as Tesla, Alphabet, IBM, Verizon Communications, General Motors and Ford, while in Europe luxury goods (LVMH, Kering, Hermès) and banking (UniCredit, BNP Paribas) are on the week’s agenda.

On the political front in the United States, Joe Biden has given his support to his vice-president Kamala Harris to replace him in the race for the White House. In a note, Goldman Sachs said it did not expect a significant change in the Democrats’ budget and trade agenda if Kamala Harris came to power.

In terms of macroeconomic indicators, the PMI activity indices in Europe and the United States, the US gross domestic product (GDP) for the second quarter and, above all, the PCE price statistic in the United States, the Fed’s preferred measure of inflation, are expected this week.

Stocks exposed to the Chinese economy, including luxury (+0.51%), spirits (Pernod Ricard gained 1.16%) and basic resources (+0.46%), are in demand after the decision of the People’s Bank of China (PBOC) to reduce the seven-day repo rate to 1.7% from 1.8% to support the economy.

In Paris, the real estate company Icade rose 3.54% after its half-yearly results.

Valneva gained 3.17% after securing new funding for its chikungunya vaccine.

Vivendi gained 0.46% after the group announced that it wants to list Canal+ on the London Stock Exchange as part of a broader spin-off project.

Ryanair plunged 11.49% after a 46% drop in its first-quarter after-tax profit over the year, below expectations.

Varta fell by 64.63%, as the German battery manufacturer announced that it was discussing two restructuring scenarios that could lead to Porsche taking a stake in its capital.

Ocado climbed 5.73% after announcing an order from Kroger for a wide range of new automated technologies for its warehouses.

Rentokil Initial shares rose 9.44% as the Sunday Times reported that former BT boss Philip Jansen is in talks to buy the British hygiene services specialist.

(Written by Claude Chendjou, edited by Kate Entringer)

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