EconomyEditor's PickNewsEuropean Stocks Higher; Stimulus Hopes and Corporate News Help

2 years ago3311 min
imageStock Markets1 hour ago (Oct 01, 2020 03:57AM ET)

(C) Reuters.

By Peter Nurse – European stock markets traded largely higher Thursday, boosted by renewed hope of a new U.S. stimulus package as well as some positive corporate news.

At 3:55 AM ET (0755 GMT), the DAX in Germany traded 0.1% lower, weighed down by steep losses in pharma and chemicals giant Bayer (DE:BAYGN), but the CAC 40 in France rose 0.7%, while the U.K.’s FTSE climbed 0.7%.

Signs of recovery in the European corporate sector have helped, typified by news from H&M (ST:HMb, the world’s second-biggest fashion retailer.

The Swedish company said its sales continued to recover in September as it reported a fiscal third-quarter profit that was slightly higher than a preliminary reading and analyst expectations. Its stock rose 6.6%.

Elsewhere, STMicroelectronics (PA:STM) rose 6.3% in Paris, as the chipmaker raised its 2020 revenue outlook, reporting a “sharp” acceleration in demand for automotive product and microcontrollers chips. The news pulled German rival Infineon’s (DE:IFXGn) stock 5.6% to a new all-time high.

Lamprell (LON:LAM) stock rose 6.4% after the oil-rig constructor said its underlying earnings returned to a profit in its fiscal first half despite the havoc wrought upon the oil market by the pandemic.

It wasn’t all good news though, as Bayer (OTC:BAYRY) slumped 12% after it flagged big likely impairments at its crop sciences division, while Rolls-Royce (LON:RR) fell 5.9% to its lowest in over 16 years after announcing plans to raise 2 billion pounds ($3.6 billion) through a deeply discounted rights issue.

Optimism for a new U.S. stimulus deal had earlier buoyed the market after U.S. Treasury Secretary Steven Mnuchin said talks with House Speaker Nancy Pelosi had made progress, and the House of Representatives duly postponed a vote on a $2.2 trillion Democratic coronavirus plan to allow more time for a bipartisan deal to come together.

“As coronavirus continues to linger and certain areas of the economy are still shut down, you need some sort of stimulus package,” said Andrea Roemhildt, investment manager at Aware Asset Management, in a Bloomberg report. “The market is just waiting for a signal that this might actually get done.”

Back in Europe, Germany’s industrial sector is only improving slowly and the coronavirus crisis is still directly hitting the earnings of industrial firms, Germany’s Ifo institute said on Thursday.

Ifo said its indicator for industrial firms’ earnings was at -32 points in September, a slight improvement from -43 points in May, when Ifo last asked companies about their earnings.

The German manufacturing PMI also pointed to a gradual recovery, climbing to 56.4 in September, above 52.2 last month. Improvements in France and Spain allowed the Eurozone manufacturing PMI to its highest in two years, however.

Oil prices drifted lower Thursday, after climbing during the previous session on the back of U.S. stockpiles falling 2 million barrels last week, defying trade expectations for a build.

U.S. crude futures traded 0.9% lower at $39.83 a barrel, while the international benchmark Brent contract rose 0.9% to $41.93. Both contracts closed more than 3% lower on Tuesday.

Elsewhere, gold futures rose 0.3% to $1,901.45/oz, while EUR/USD traded 0.1% higher at 1.1733.

European Stocks Higher; Stimulus Hopes and Corporate News Help

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