FRANKFURT, Oct 13 ― European shares hit a five-week high yesterday as optimism about a stable economic recovery in China and hopes of more US fiscal stimulus helped offset concerns around surging Covid-19 cases across the continent.
The pan-European STOXX 600 marked a third straight day of gains to end 0.7 per cent higher, led by utilities, technology and autos stocks.
The Trump administration on Sunday called on the US Congress to pass a stripped-down coronavirus relief bill after talks stalled on a more comprehensive stimulus deal.
“Investors have not lost faith that further stimulus measures will follow and that an effective Covid-19 vaccine will soon be placed on the market,” said Milan Cutkovic, market analyst at Axi.
But a jump in domestic coronavirus cases has raised the spectre of fresh lockdowns and cast a shadow over a nascent economic rebound.
With Italy preparing for nationwide curbs, the European Central Bank's chief economist, Philip Lane, said the euro zone economy was entering a tougher phase. UK Prime Minister Boris Johnson also imposed a tiered system of further restrictions on parts of England, including closing some pubs.
British pub and restaurant owners Marston's Plc and Restaurant Group Plc fell 5.3 per cent and 9.3 per cent, respectively, while the blue-chip FTSE 100 lost 0.3 per cent.
“Investors are walking on thin ice,” Cutkovic said. “Further lockdowns would jeopardise the already fragile economic recovery and have lasting effects on consumer confidence.”
Data on inflation, industrial production and business conditions is due later in the week. All eyes will also be on a European Union summit on October 15 and 16, particularly with a UK-imposed deadline for a post-Brexit trade deal.
“It seems progress has been made and if this continues, I would expect talks to continue beyond that self-imposed UK deadline,” said Deutsche Bank strategist Jim Reid.
The Italian bourse ended 0.6 per cent higher, shrugging off a slide in bank stocks as Italian government bond yields fell near record lows on expectations of a new round of stimulus from the European Central Bank.
As the third-quarter corporate earnings season gets under way, analysts expect earnings at STOXX 600 firms to have declined 38 per cent year-on-year in the quarter following a 50.8 per cent slump in the prior quarter, according to Refinitiv data.
The European telecoms index surged to a three-week high, powered by a 6.8 per cent jump for Dutch telecommunications company KPN following a report that Sweden-based private equity firm EQT was considering a takeover. ― Reuters
Source: Malay Mail
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