Europe Opens Higher After Late Run on Wall Street

US fiscal stimulus optimism lifts sentiment & pulls on USD, boosting commodity prices. FTSE miners & oil majors rise

Charts (5)

European stocks are heading out of the blocks on the front foot after a late run higher on Wall Street. 

US Fiscal stimulus hopes boosted the mood in the market in late trade on Thursday, helping the US indices close on positive ground. US lawmakers are reportedly working on a $2.2 trillion coronavirus stimulus package which could be voted on a soon as next week.

The news comes after the latest US jobless claims data showed that 870K Americans signed up for unemployment benefit last week, above the 860K the week before, in a sign that the recovery in the US labour market is plateauing.

More stimulus needed in Europe?
The prospect of additional fiscal stimulus to support the stalling economic recovery in the world’s largest economy is boosting sentiment even as covid cases in Europe unnerve investors. There is a good chance the EU might also need to dip its hand in its pocket again.
The likelihood that EU will need to agree to further stimulus as well is rising. Data earlier this week showed that the economic recovery in the eurozone is on very shaky ground with service sector activity already back in contraction. With covid cases rising in the old continent and further tightening restrictions almost certain over the coming weeks, the chances of a double dip recession are rising.

Commodity prices rise lifting FTSE
The FTSE is managing to advance, as the prospect of additional US stimulus is dragging on the US Dollar, offering some relief to the battered commodities. As commodity process rise on the weaker dollar, heavy weight miners and oil majors are advancing.

Vaccine updates
Vaccine news is not offering support to sentiment. Novavax started a late stage trial of its covid-19 vaccine candidate in partnership with the British government’s Vaccine Taskforce. With UK covid cases reaching 6,634 over the past 24 hours and restrictions being tightened to stem the spread of the virus, any even mildly positive vaccine news is welcome right now. 

In other Vaccine news, AstraZeneca has struck a deal with the EU to receive partial immunity from risks involved with the speedy roll out of its covid-19 vaccine. The EU have agreed to pay claims over certain side effects above a certain limit, shifting the liability of risks associated with such a quick vaccine development away from the drug maker to the taxpayer. However, the news has failed to lift the share price.

FTSE Chart

More from FTSE 100

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account