European Stocks Higher; Corporate Earnings, Reopenings Help Tone


By Peter Nurse – European stock markets traded higher Thursday, rebounding after the previous session’s sharp losses, helped by strong earnings and as a receding pandemic allows the region to reopen its economy

At 3:50 AM ET (0850 GMT), the DAX in Germany traded 0.5% higher, the CAC 40 in France rose 0.6% and the U.K.’s FTSE 100 climbed 0.4%.

The major European indices fell sharply Wednesday after minutes from the Federal Reserve’s April meeting suggested that the central bank officials were considering tapering its asset purchase programs in upcoming meetings.

However, the tone is more promising Thursday, with investors turning their attention to promising corporate news throughout the European region

Bouygues (PA:BOUY) stock gained 2% after the French conglomerate raised the full-year guidance for its telecoms division and reported a smaller than expected first-quarter core loss.

Deutsche Telekom (OTC:DTEGY) stock gained 1.5% on raising its medium-term core profit outlook, while Nordic Semiconductor (OL:NOD) soared 11% after being linked to Franco-Italian chipmaker STMicroelectronics (PA:STM).

Staying with the M&A theme, Britain’s competition regulator has cleared a $ 44 billion merger between broadband company Virgin Media and Telefonica’s (NYSE:TEF) U.K. mobile network O2, after a review lasting months.

On the flip side, Royal Mail (LON:RMG) stock fell 1.6% after it decided not to give a forecast for the current year, with its U.K. parcel volumes down 2% last month. EasyJet (LON:EZJ) stock fell 1.3% after the budget airline posted a first-half loss of 701 million pounds ($ 990 million). EasyJet also trimmed its flying capacity to 15% of pre-pandemic levels for the current quarter (from 20% previously) but said it hopes to run at 90% capacity in the key summer quarter.

Adding to the positive tone, authorities across Europe are loosening restrictions as infection rates fall and vaccinations rise. The U.K. largely reopened on Monday and reports suggest the government is increasingly confident it can lift remaining restrictions on June 21, as planned. Italy, the original epicenter of the crisis in Europe, will phase out its national curfew in the coming weeks, and tough curbs are gradually easing across Germany.

Yet, while the Covid situation is improving throughout the region, ECB chief Christine Lagarde said on Tuesday it was “essential that monetary and fiscal support are not withdrawn too soon”, suggesting that the region has a lot less immediate risk regarding central bank policy changes than across the pond.

The European data slate is pretty empty Thursday, but more clues on the pace of the U.S. labor market recovery will come from the weekly initial jobless claims release.

Oil prices edged higher Thursday, rebounding to a degree after the sharp falls of the previous session when traders digested rising U.S. stockpiles, the prospects of more Iranian crude entering the market as well as worries of the Fed tapering back its ultra-easy monetary policies.

U.S. crude futures traded 0.4% higher at $ 63.61 a barrel, while the Brent contract rose 0.2% to $ 66.81. Both contracts fell around 3% on Wednesday, to near three-week lows.

Additionally, gold futures fell 0.4% to $ 1,874.10/oz, just below the four-month high reached the previous session, while EUR/USD traded 0.2% higher at 1.2199.

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