Europe open: Banks lift Stoxx 600 to three-month high
European stocks edged higher on Tuesday as investors reacted to inauguration of new US president Donald Trump, with fears about impending trade tariffs easing – at least for now.
The Stoxx 600 was up 0.15% at around 524.66 by 0952 CEST, trading at levels not seen since mid-October and within a whisker of its record closing high of 528.08 reached on 27 September.
Banking stocks across the continent were performing well, with Avanza, Lloyds and Bank of Ireland among the best performers.
“The general market reaction has been muted to the new President’s raft of executive orders, even bringing some relief in the absence of the expected immediate announcements on tariffs," said Richard Hunter, head of markets at Interactive Investor.
"Of course, the real tests are yet to come when the potentially inflationary impacts of any tax cuts, lesser regulation and immigration policies are known, while the generally pro-business agenda could work in investors’ favour. [...] There is also the possibility that the new President introduces measures which are less inflationary than expected, which in turn could prompt the Federal Reserve to resume its interest rate cutting cycle," Hunter said.
Tuesday was set to be a relatively quiet day for economic data, with the German Zew investor sentiment survey for January the only major release.
In the UK, figures released earlier by the Office for National Statistics showed that the unemployment rate and wages grew in the three months to November. The unemployment rate rose to 4.4% from 4.3%. Meanwhile, average earnings including bonuses grew 5.6% on an annual basis, up from 5.2% and in line with consensus forecasts.
Banking stocks jump
Online bank Avanza was a high riser early on in Stockholm, jumping more than 10% after beating expectations with its fourth-quarter results. Revenues jumped 20% to SEK1.06bn, ahead of the SEK1.01bn forecasts, while lower-than-expected costs helped the bottom line come in ahead of estimates.
London bank Lloyds was up 5% while the Bank of Ireland gained 2% in Dublin on the back of news that chancellor Rachel Reeves is stepping in to protect lenders from multibillion-pound payouts in the car finance mis-selling case.
Leading the downside were renewable energy stocks, specifically those in the wind sector, after Donald Trump signed an order to temporarily freeze new offshore wind farm leases.
Danish wind farm developer Ørsted, which just this week took a huge impairment due to challenges in the US offshore wind market, tumbled 17%, while Vestas Wind Systems, EDP Renovaveis, EDP-Energias de Portugal and Acciona also dropped.