European stocks closed higher yesterday as news of additional stimulus in Germany and anticipated economic recovery measures in France overcame concerns about rising Covid-19 cases across the continent.
The pan-European STOXX 600 index added 0.9%, with German stocks up 1% and France’s CAC 40 0.8% higher.
Having led the recovery from March’s pandemic-driven lows, technology shares were the day’s best performers, mirroring gains on Wall Street.
Heavyweight German enterprise software maker SAP SE rose 2.2% after US peer Salesforce.com raised its 2021 revenue forecast.
Germany’s coalition parties agreed to extend measures to cushion the economic effects of the coronavirus crisis at a cost of up to 10bn euros, while France is set to present its economic recovery plan on September 3.
“This is an important sign for investors, as another standstill of the European economy would have devastating consequences,” said Milan Cutkovic, Market Analyst at AxiCorp.
“The co-ordinated response of the European Union to the Corona crisis has also strengthened confidence.”
Caution was, however, still evident as Covid-19 cases on the continent continued to rise and two confirmed cases of coronavirus re-infections in Europe raised concerns about immunity to the virus.
Markets were also waiting for US Federal Reserve chairman Jerome Powell’s speech on Thursday, which could offer further cues on the US economic recovery.
Economic data in the past week has muddied the outlook for the euro zone recovery, keeping the STOXX 600 in a holding pattern about 15% below its all-time high, even as US stocks hit new peaks on easing US-China trade tensions and hopes of a coronavirus treatment.
“We’ve had a disappointing set of flash PMIs last week, which gives you an impression that after the initial rebound, the recovery is going to stall,” said Andrea Cicione, head of strategy at TS Lombard.
Swedish radiation therapy equipment maker Elekta topped the STOXX 600 after posting a bigger-than-expected first-quarter profit.
HiQ International soared nearly 26% after private equity firm Triton announced a 3.9bn crown ($444.92mn) cash bid for the Swedish IT consultancy firm.
Telecom Italia rose 5.1% after a local newspaper reported the Italian government had given approval to US investment firm KKR to buy a minority stake in its secondary grid.
Ambu, which makes diagnostic and life-support devices for hospitals, slumped 13.4% after it cut its full-year earnings forecast.
World stock markets marked time, with the coronavirus’ economic impact and fresh outbreaks in some countries weighing on investors’ minds, while hope sprung from hints it is easing elsewhere and that a vaccine could arrive soon.
Oil prices continued to test five-month highs with North American producers bracing for the arrival within hours of Hurricane Laura in the US Gulf Coast region.
Around three million barrels per day of refining capacity have been closed after US authorities said the hurricane could bring “potentially catastrophic storm surges, extreme winds and flash flooding.”
Futures prices for US benchmark West Texas Intermediate traded in a tight range and dipped ahead of mid-session gains to break above $43.60 — a rise of half a per cent — before slipping back slightly.
“Investors’ insatiable appetite for risk has continued so far this week, with major US indices hitting new record highs and crude oil prices rallying to their best levels since the pandemic,” said ThinkMarkets analyst Fawad Razaqzada.
Wall Street was almost unchanged two hours in, while London and Paris made the most meagre of gains, not least over concern at the lingering presence of the coronavirus, although Frankfurt added 1.0%.
“Second wave fears are becoming more real in Europe as a number of countries, particularly tourist destinations such as Spain and France, are seeing a strong rise in Covid-19 cases,” said City Index analyst Fiona Cincotta.
“Governments...are showing reluctance to slap nationwide lockdowns into place just yet but investor concerns are growing.”
Attention is now turning towards a virtual meeting of central bankers in Jackson Hole, Wyoming, with the key event a Thursday speech by US Federal Reserve chief Jerome Powell.
Most markets had wobbled on Tuesday as fading US consumer confidence undermined news that China and the United States would stick with a trade pact agreed earlier this year, although Wall Street booked a three-day string of record closes.
In London, the FTSE 100 closed up 0.1% to 6,045.60 points; Frankfurt — DAX 30 ended up 1.0% to 13,190.15 points; Paris — CAC 40 closed up 0.8% to 5,048.43 points and EURO STOXX 50 ended up 0.8% to 3,356.33 points yesterday.
from Gulf Times https://ift.tt/2QsJycd
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