Europe open: Markets higher as electronics spark investor sentiment
European stocks rose on Friday as electronics stocks drove sentiment after positive earnings updates from chipmakers and a strong US session overnight.
The pan-European Stoxx 600 index rose 0.6% at 0920 GMT and had gained 5% over the last month. Germany’s DAX index jumped 0.75% after economic data showed better-than-expected November industrial output and exports.
Investors were also eyeing US non-farm payrolls later in the day. Soon-to-be former US President Donald Trump overnight finally said there would be a peaceful transition of power to Joe Biden and condemned the violence perpetrated by his supporters on Wednesday when they stormed the Capitol building in Washington.
Markets.com analyst Neil Wilson said investors were hoping for "a more settled political environment in the US and the firm belief that fiscal expansion and continued monetary policy support will deliver further upside for equity markets".
"The big concern is that procyclical fiscal policy is too hot: the stimulus isn’t really needed, inflation really gets out of hand, bonds crater and market interest rates move aggressively higher, forcing central banks into needing to make some unpalatable decisions later this year. "
"The risk is the Democrats really over-egg the pudding, but this is not a significant worry today given we are still in the midst of a pandemic and, it should be said, most of the stimulus is supporting real people in the real economy and not being funnelled into financial institutions."
In equity markets, computer chipmaker STMicroelectronics was higher after its early revenue estimate for the fourth-quarter came in above the previous range. Infeon and BE Semiconductor were also up.
UK housebuilders also gained after Barratt Developments said it planned to restart dividends as it reported strong trading in the first half. Forward sales in the six months to the end of December rose 14.3% to 13,588 homes from a year earlier at a value of £3.2bn - up 19.4%.
Barratt rallied, along with Taylor Wimpey, Persimmon, Crest Nicholson and Vistry.
Signature Aviation fell, having risen sharply on Thursday, after it confirmed it had received an approach from private equity firm Carlyle Investment Management regarding a possible offer for the company.
Food and clothing retailer Marks & Spencer was weaker after it reported a fall third-quarter revenue as it warned the latest UK Covid lockdown would hit sales and the Brexit trade deal “significantly impact” some of its European operations.
Like-for-like revenue in the 13 weeks to December 26 fell 7.6% to £2.5bn with a 4.4% rise on food sales over the festive period offset by a 24.1% slump in clothing and homewares.