Europe open: Shares bounce back on US stimulus hopes
European shares started Tuesday in positive form, rebounding from Monday’s session as upbeat corporate news and US stimulus hopes drove sentiment.
The Stoxx 600 index was up 0.4%. Germany’s DAX rose 0.37% and London’s FTSE a modest 0.14% as the UK government warned of a bumpy ride ahead for the domestic economy and tougher enforcement of coronavirus restrictions.
US futures were slightly higher after falls overnight on Wall Street.
“Equities sold off yesterday as last week’s bullish mood was swapped for a more cautious attitude. There was an absence of positive news yesterday so the stories about the health crisis were at the centre of attention,” said CMC Markets analyst David Madden.
“The Chinese authorises announced the country registered its highest daily rise in coronavirus cases in five months. China has held up relatively well in terms of the health emergency so the resurfacing of the crisis rippled through the markets. Germany, France and the UK continue to endure high case numbers too.”
Madden said Monday’s fall “needs to be put in the context of the large gains that were posted last week”.
“In recent sessions, the speculation that President-elect Joe Biden will map out new stimulus plans has dominated the headlines. Also the vaccine news is assisting the upbeat sentiment. Stocks on both sides of the Atlantic fell yesterday, but traders haven’t lost sight of the Biden and vaccination roll-out stories,” he added.
In corporate news, shares in house builder Vistry gained 3% as the company said it would resume dividend payments and full-year profits would be at the upper end of expectations.
European DIY group Kingfisher saw its shares rise as the DIY boom continued during renewed lockdowns. The owner of B&Q in the UK and Brico Depot in France said it expected current year profits to be at the top end of forecasts as fourth quarter like-for-like sales rose 16.9%, driven by people purchasing online amid tightening coronavirus restrictions.
BP, Royal Dutch Shell and Total gained as crude prices rose on expectations of a drawdown in the US oil stockpile.
Danish shipping company Maersk rose 2.8% after an upgrade to “buy” from broker Berenberg, saying earnings momentum driven by freight prices could see the stock run higher.