While the euro sold off and bund yields climbed on reports that German Chancellor Angela Merkel has started the process of stage-managing her exit, shares of German automakers climbed early Monday morning following a rough stretch for automakers, which have been badly bruised during the 'Shocktober' selloff, following reports that China's top economic planner has proposed a 50% cut to the mainland's 50% car tax, which would make foreign cars significantly more affordable in the world's largest growth market for automobiles, even as sales soften in the US.
The Stoxx 600 Automobiles & Parts index rose 3.8% on the news, its strongest intraday advance since July 5, making it the best-performing sector of the wider European gauge, which is up 1.1%. BMW, Daimler and Volkswagen were among the largest individual gainers. Automakers also benefited from the weaker euro.
China has long viewed its auto market as a candidate for liberalization as the Communist Party seeks to open China's economy to foreign trade. Back in May, China unexpectedly slashed auto tariffs during a lull in the US-China trade war.