(MENAFN – Gulf Times) European stocks rose yesterday, boosted by positive earnings updates from Barclays and a surge from Airbus, but lingering concerns about the economic impact of the surge in Covid-19 cases have saw the markets post their biggest weekly decline in a month.
Breaking a four-day losing streak, the pan-European STOXX 600 index rose 0.6% with London’s FTSE 100 outperforming its European peers after Barclays jumped 7% on strong results.
This has enabled regional banks to move forward, putting them on track for their best monthly performance for over a year.
Other sectors considered to be more economically sensitive such as car manufacturers and oil and gas have also been favored.
“Barclays’ better-than-expected results have sparked renewed interest in bank stocks, most of which are trading at depressed levels, so value investors will be particularly interested,” said Russ Mold, chief investment officer at AJ Bell.
Meanwhile, data yesterday showed that economic activity in the eurozone plummeted this month, while Germany’s manufacturing sector grew at a faster pace in October.
But German service activity has declined, suggesting that Europe’s largest economy operates at two speeds.
“Opposing forces are at play at the moment,” said Emmanuel Cau, head of European equity strategy at Barclays. “Globally, you have these two main sources of growth in the US and China that are still recovering, so part of the European market will always benefit from the strength outside of Europe.
“But the domestic part of the market exposed to mobility and restrictions is impacted by the second wave.
The surge in Covid-19 cases in the region has led to more brakes of late as France seeks to expand the curfew to more than two-thirds of its population.
Finance Minister Bruno Le Maire said GDP would likely contract in the fourth quarter, adding that the curfew measures would cost around € 2 billion ($ 2.36 billion). With some optimism this week stemming from the new fiscal stimulus in the UK, markets are now looking to the European Central Bank meeting next week when analysts expect the bank to signal political support in December. .
Globally, the mood was cautious with less than two weeks of the US presidential election.
Planemaker Airbus jumped 5.6% after telling suppliers to be ready for a production boost once demand recovers from the coronavirus crisis.
The luxury group Kering fell 3.2% as its flagship brand Gucci underperformed its competitors.
Swiss engineering company ABB was among the biggest brakes on the STOXX 600 after saying it expected its orders and revenue to remain under pressure for the remainder of 2020.
New York opened flat and then pulled back, with the company’s results a mixed bag that produced steep losses as Intel’s stock fell 11%. Markets are watching closely if, as appears to be the case, upward momentum in the third quarter slows down in the last quarter of the year as governments introduce new restrictions to tame the escalation of the pandemic.
Investors have been largely unresponsive to the final presidential debate between Donald Trump and Joe Biden ahead of the November 3 vote.
Democratic House Speaker Nancy Pelosi said the two sides “continue to be engaged in negotiations and I hope we can come to an agreement.
Pelosi this week sought to strike a deal with Republican President Trump’s Treasury Secretary Steven Mnuchin, even as Republicans in the Senate are still not convinced.
“The stock markets (get) a bit of buoyancy over the weekend as Mnuchin and Pelosi work on a stimulus package,” said Craig Erlam, analyst at OANDA.
“ Given the opposition from Republican senators to the broad package that the White House and House Democrats are negotiating, it would appear the markets are focusing more on the likelihood (of a deal) later, ” Karl Haeling said. by LBBW.
Bets on a Biden victory and a Democratic sweep of both houses of Congress have risen recently, with the consensus being that such an outcome would see the passage of an even bigger stimulus than the roughly $ 2 billion currently being discussed.
In London, the FTSE 100 closed up 1.3% at 5,860.28 points; The Frankfurt DAX 30 finished up 0.8% at 12,645.75 points; Paris CAC 40 closed up 1.2% at 4,909.64 points and the EURO STOXX 50 ended up 0.7% at 3,193.03 points yesterday.
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