European Markets Moderately Higher, Reopening Stocks in Fashion
European stocks turn higher, hovering near all-time highs. As Covid-19 subsides across the old continent, investors bet the rally would continue.
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- European stocks turn higher, hovering near all-time highs
- As Covid-19 subsides across the old continent, investors bet the rally would continue
A tepid start for European markets this morning pushed stocks into narrow trading as European investors weigh the prospects of further gains on the back of gradual emergence from the pandemic. Eurozone stocks this year have been increasingly favored by investors who expect the reopening to benefit economically sensitive stocks, such as travel companies, airlines, and others focused on the reopening of the summer tourist season in Europe. Financial and energy are also preferred sectors for reopening trades by market participants.
A brighter outlook on the coronavirus front has propelled major benchmarks across Europe to new highs, including an all-time high this week for the pan-continental Stoxx Europe 600. The broad-market index rose to a record of 446.47 on Tuesday, surpassing the previous peak of 446.19 in early May.
On Thursday, European indexes are mostly positive. The Stoxx 600 is higher by less than 0.1%, or less than 0.1 points, trading at 445.45. The UK’s FTSE100 is virtually unchanged, hovering right around the flatline, currently at 7,025 points. The French CAC40 is also marginally higher by about 0.3%, gyrating near 6,410 points. The German DAX is negative on the day, lower by 0.45%, trading at 15,385 points.
The German index accelerated to an all-time high earlier in the week, boosted by news that Europe’s largest residential property group Vonovia SE will acquire its long-time rival Deutsche Wohnen in an €18bn deal ($22bn).
Jeff Bezos Gets Dethroned
Reopening optimism in recent months has fueled European indexes to record highs, similar to stocks overseas. The Stoxx Europe 600 is higher by roughly 12% this year, in line with Wall Street’s S&P500 which has gained a little over 13% for the same period.
In corporate news, Bernard Arnault, the Chief Executive of the French luxury group LVMH, earlier in the week unseated Amazon founder Jeff Bezos as the world’s richest person. His estimated worth surpassed $186.3bn, just $300mn above Jeff Bezos’ own net worth of $186bn. Later, however, Mr. Bezos reclaimed the top spot, according to the Bloomberg Billionaires Index. Still, the luxury titan remains Europe’s richest person.
Meanwhile, France joined Germany in restricting travellers from the UK amid fears over the fast-spreading Indian coronavirus variant. Starting May 31, France will impose a mandatory quarantine period for passengers coming from Britain. Confirmed coronavirus cases in Europe have been declining while the rate of vaccination has been growing. Presently, over 46% of the adult EU population has received at least one dose of a Covid-19 vaccine, bringing the total amount of doses administered to 245 million by May 25.
The European Commission, on Wednesday, announced it will not accept late deliveries of vaccines by AstraZeneca. More than that, it has demanded damages, potentially worth billions if the pharmaceutical company fails to meet its contractual obligations and increase vaccine deliveries by next month due to the reduced amounts delivered in the first quarter.
A lawsuit has been launched by the European Commission in an attempt to force AstraZeneca to deliver 90 million doses of the vaccine in the second quarter. The number is raised by 20 million, up from the currently scheduled 70 million. Part of the legal action is a penalty of €10 a dose a day if AstraZeneca does not supply the extra 20 million shots by the end of June.