European Stocks Edge Higher; Volkswagen Helps as Covid Worries Rise


By Peter Nurse – European stock markets edged higher Tuesday, helped by gains from car giant Volkswagen but fresh Covid concerns mounted.

At 3:55 AM ET (0850 GMT), the DAX in Germany traded 0.5% higher, the CAC 40 in France was up 0.1% and the U.K.’s FTSE index climbed 0.5%.

Global equity markets have posted strong gains over the last few months, as investors expressed confidence in the return to health of the global economy from the pandemic on the back for extraordinary amounts of monetary and fiscal stimulus.

UBS lifted its view on Chinese growth earlier Tuesday, now seeing the world’s second largest economy expanding 9% this year, faster than the earlier forecast of 8.2%.

However, confidence is waning in Europe as fears of another wave of the Covid-19 virus hitting the continent grow. German coronavirus infections are spreading exponentially, up 20% in the last week, an expert at the Robert Koch Institute for infectious diseases said on Tuesday, while the French health ministry reported late Monday that a new coronavirus variant has been found in Brittany.

Additionally, Germany on Monday became the latest country in the region to suspend the use of AstraZeneca’s COVID-19 vaccine after reports of possible serious side effects, likely slowing the pace of vaccinations in the region, delaying any recovery from the pandemic.

These worries prompted Deutsche Bank to cut its gross domestic product growth projection for the euro area to 4.6% for 2021, from the 5.6% projected in November.

In corporate news, Volkswagen (DE:VOWG_p) stock rose 3.7%, climbing to its highest level in the last year, after the world’s second-largest carmaker said it was confident that cost cuts will help it improve profit margins in the coming years.

Zalando (DE:ZALG) stock rose 4.9% after the online fashion retailer forecast strong 2021 revenue growth.

Credit Suisse (SIX:CSGN) stock rose 2.1% despite the Swiss banking giant flagging the possibility of writedowns following the collapse of its Greensill-linked supply chain finance funds and other dealings with the specialty firm.

Away from Europe, the Federal Reserve starts a two-day policy meeting later Tuesday. The spotlight on the central bank will be even more intense this week as a surge in bond yields and a rebounding U.S. economy has called into question its very loose monetary policies.

Oil prices edged lower Tuesday, with traders banking profits after recent gains ahead of key U.S. crude inventory data from the American Petroleum Institute later in the session.

U.S. stockpiles have been rising as production continues a slow recovery from February’s unexpected cold snap in Texas and the surrounding areas.

U.S. crude futures traded 1% lower at $ 64.65 a barrel, while the Brent contract fell 0.9% to $ 68.23. Both contracts climbed last week to their highest levels since the start of the pandemic.

Elsewhere, gold futures rose 0.1% to $ 1,730.45/oz, while EUR/USD traded 0.1% lower at 1.1926.

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