European Stocks Higher, Boosted by Fed Officials, U.K. Employment Data

This post was originally published on this site – European stock markets traded higher Tuesday, helped by promises of continued Federal Reserve largesse along with better than expected U.K. employment data.

At 3:30 AM ET (0830 GMT), the DAX in Germany traded 0.6% higher, at an all-time high, the CAC 40 in France rose 0.6%, climbing to a new 52-week high, the U.K.’s FTSE 100 climbed 0.7%, while the blue-chip Euro Stoxx 50 gained 0.7%, also to an all-time high.

European stock markets have struggled of late over worries that growing inflationary pressures could force the Federal Reserve to start tapering its ultra-easy monetary policies in the near future.

However, Dallas Federal Reserve President Robert Kaplan on Monday reiterated his view that he does not expect interest rates to rise until next year, while Federal Reserve Vice Chair Richard Clarida pointed to the recent disappointing jobs report as evidence the U.S. economy had not yet reached the threshold to warrant scaling back the central bank’s massive bond purchases.

These comments have helped to reassure the markets, and put the focus firmly on Wednesday’s release of the minutes from the Federal Reserve’s April policy meeting, which could shed more light on the policymakers’ outlook on inflation.

Adding to the positive tone, Britain’s unemployment rate unexpectedly fell again to 4.8% between January and March, a period which the country spent under a tight Covid lockdown, and hiring rose further in April as the country reopened.

In the Eurozone, Germany’s Constitutional Court rejected a suit that aimed to stop the ECB’s buying of government bonds, helping sentiment at the margins. 

“Slowly but surely, Karlsruhe is losing its role of lender of last resort for German euro critics,” said Carsten Brzeski, an economist with ING, via Twitter.

Next up is the release of the flash estimate of Eurozone first-quarter gross domestic product, which is expected to show that the bloc contracted by 0.6% in the first quarter, and by 1.8% on an annual basis, as the region struggled with fresh lockdowns.

In corporate news, Generali (MI:GASI) stock rose 1.1%, to a 52-week high, after the Italian insurer’s first-quarter profits beat expectations, helped by the positive contribution from the non-life and asset management businesses.

Imperial Brands (OTC:IMBBY) stock rose 2.4% after the tobacco company maintained its full-year outlook despite its first-half profit and sales falling short of expectations, hurt by lower retailer demand for cigarettes in the United States.

On the flip side, Vodafone (NASDAQ:VOD) stock slumped 6.2% after the mobile operator reported a 1.2% drop in full-year adjusted earnings, coming in at the bottom of its guidance and missing market expectations, after Covid-19 hit roaming revenue and handset sales. Warnings of higher capital spending ahead also weighed on the stock.

Oil prices pushed higher Tuesday, continuing the optimism of the previous session as the major oil-consuming economies of the U.S. and Europe further reopen on the back of successful vaccination programs.

That said, worries still exist about the Covid-19 situation in India, the third largest consumer of oil in the world, as well as new outbreaks in other parts of Asia, including Taiwan and Singapore.  

Investors now await U.S. crude oil supply data from the American Petroleum Institute, due later in the day.

U.S. crude futures traded 1.1% higher at $67.00 a barrel, while the Brent contract rose 1.1% to $70.20, climbing above the $70 level for the first time since early March.

Additionally, gold futures rose 0.2% to $1,870.60/oz, while EUR/USD traded 0.4% higher at 1.2199.