European shares rise after Wall Street closes higher
European stocks rose on Thursday as traders weighed on strong US economic data released during the previous session and the minutes of the Federal Reserve’s latest policy meeting.
The Stoxx Europe 600 Index closed 0.4 percent higher. On Wednesday, the regional index cut a string of losses after closing lower on each of the previous four trading days, dropping 1.3 percent on Tuesday. Various countries in the bloc last week introduced new coronavirus restrictions in response to rising case numbers.
Germany’s DAX rose 0.2 percent, while France’s CAC 40 rose 0.5 percent. The FTSE 100 index in London rose 0.3 per cent.
After reimposing pandemic restrictions in countries such as Germany and the Netherlands, Goldman Sachs on Wednesday slightly lowered its eurozone growth forecast for the fourth quarter of this year by 0.2 percentage points to 0.8 percent. The bank cut its estimate for the first quarter of 2022 by 0.3 percentage points to 0.6 percent.
“The downgrade is driven by expectations of renewed weakness in Covid-sensitive services, such as hospitality, arts and entertainment,” the bank noted, adding that any impact on inflation is likely to be minimal. “[We] Look for a sharp rebound in growth in the second quarter, as restrictions are lifted.”
In the United States, the blue-chip S&P 500 Index ended up 0.2 percent on Wednesday, with the technology-focused Nasdaq Composite closing down 0.4 percent. The moves came on the heels of new data showing that weekly unemployment claims in the US have reached their lowest level since 1969.
Other data showed that a measure of inflation closely followed by the Fed posted the largest year-on-year jump in October since the 1990s. The core PCE index posted a 4.1 percent increase, in line with economists’ expectations but up from 3.7 percent in September.
Meanwhile, the minutes of the Federal Reserve’s policy meeting in November noted that officials “emphasized that maintaining flexibility” was important as the $120 billion per month pandemic-era asset purchase stimulus program was withdrawn.
Officials, who are expected to start raising interest rates only once this tapering ends, noted that inflation “may take longer to subside than they previously expected.”
The US stock market and the Treasury market were closed Thursday for the Thanksgiving holiday.
Tatjana Grill-Castro, co-head of public markets at Muzinich & Co, said the Thanksgiving holiday was an “excuse for all markets to be very slow” and that “whatever data we saw yesterday won’t be expressed until tomorrow, so we should see very little more.” where movement is.
She said high energy and food prices would remain, and said inflation was likely to prove “steady” in the long run.
In the European government debt markets, the yield on German 10-year Treasuries was flat at -0.25 percent on Thursday. Bond yields move inversely to their prices.
Although the Federal Reserve, the European Central Bank and the Bank of England have yet to start raising interest rates, South Korea on Wednesday increased borrowing costs for the second time in three months, after the Reserve Bank of New Zealand announced earlier in the week that it would tighten monetary policy.
In currencies, the dollar index – which measures the US currency against six other currencies – was down about 0.1 percent. The euro, which touched its lowest level against the dollar since June 2020, on Wednesday again rose above the $1.12 threshold.
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