U.K. Stocks Surge on Brexit Deal, Leading European Equity Rally

U.K. stocks soared on Tuesday, leading a rally in European equities, in the British market’s first trading session since a Brexit deal was struck with the European Union.

The FTSE 100 Index rose 2.4% while the FTSE 250 gained 1.8%, with stocks most exposed to the British economy such as homebuilders and travel stocks pushing the advance. EU ambassadors have given the green light to the draft free-trade agreement with the U.K., paving the way for formal approval today.

The Stoxx Europe 600 Index was up 1.1%, extending Monday’s gains after U.S. President Donald Trump signed a virus relief bill. Among individual movers, Deutsche Lufthansa was up 6% after the chairman of its Swiss unit said it’s able to pay back a government loan and won’t need additional borrowings.

Although the pandemic and lockdowns have weighed on European stocks this year, equities have rallied since the end of October, boosted by positive vaccine developments, the prospect of a Brexit trade deal and further stimulus measures.

“It remains fascinating whether stock markets can use more momentum or whether they will suffer from potential profit taking, as the end-of-year rally has already pushed many stocks toward new records and some investors could be tempted to take some money of the table,” Comdirect Bank strategist Andreas Lipkow said in an email.

Despite the day’s gains, the FTSE 100 is still down 12% year-to-date, while Germany’s DAX is up 4.7% and the S&P 500 is up 16% in 2020.

— With assistance by Jan-Patrick Barnert

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