European Stocks Edge Higher; U.S. Infrastructure Package Boosts Sentiment


By Peter Nurse – European stock markets edged higher to record levels Thursday, boosted by additional stimulus in the form of the new U.S. infrastructure plan which overshadowed Covid worries.

At 3:40 AM ET (0840 GMT), the DAX in Germany traded 0.6% higher at an all-time high, the CAC 40 in France rose 0.2%, the U.K.’s FTES 100 gained 0.5%, while the blue chip Euro Stoxx 50 gained 0.4%, also at an all-time high. 

Offering support was the news that President Joe Biden is set to inject another $ 2 trillion into the U.S. economy, the world’s driver, with spending on roads, railways, broadband, clean energy and semiconductor manufacture, funded in part by a sharp rise in corporate taxes.

The plan is likely to face opposition from Republicans in Congress, but it comes fresh on the heels of a $ 1.9 trillion pandemic relief package.

The news in Europe is less encouraging, with President Emmanuel Macron on Wednesday ordering France into its third national lockdown as he sought to push back a third wave of Covid-19 infections.

New infection numbers hit their highest since November this week in Europe’s second-largest economy, while the number of those in intensive care is now approaching the peak of the first wave last year.. 

Pressure is also rising in Germany for the reintroduction of tougher lockdown measures, while Sweden’s government will postpone a planned easing of some restrictions until the start of May.

German retail sales disappointed in February, falling 9.0% on the year and only climbing 1.2% on the month. The final manufacturing PMI data for the European Union are due later in the session. 

In corporate news, ASML (AS:ASML) stock rose 1.6%, to a record high, with the semiconductor sector in demand during the Covid-19 pandemic as consumers buy more electronics for their homes. Vinci stock rose 3.0% after the French infrastructure company said it will buy the energy business of Spain’s ACS (MC:ACS) for 4.9 billion euros ($ 1.75 billion), a move that beefs up its exposure to renewable energy significantly.

In the U.K., Next (LON:NXT) shares rose 3.2% to an all-time high after publishing strong earnings and an upbeat look ahead to the reopening of its physical stores. Deliveroo (LON:ROO) stock fell 1%, as Europe’s biggest IPO of the year to day failed to generated even a modest bounce after slumping by nearly one-third on its debut. 

Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip manufacturer, announced plans earlier Thursday to invest $ 100 billion over the next three year to increase capacity at its plants.

Oil prices pushed higher Thursday on expectations that a group of top producers will agree to largely maintain output curbs into May at a meeting later in the session given the surge of Covid-19 cases in many regions.

The Organization of Petroleum Exporting Countries and its allies, a grouping known as OPEC+, is currently reining in output by just over 7 million barrels a day to support prices and reduce oversupply. Saudi Arabia has added to those cuts with a further 1 million barrels a day.

U.S. crude futures traded 1.5% higher at $ 60.05 a barrel, while the Brent contract rose 1.4% to $ 63.60. 

Elsewhere, gold futures rose 0.2% to $ 1,719.75/oz, while EUR/USD traded 0.1% higher at 1.1738.

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