European Markets Open Higher After Worst Week in 6 Months

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Principal Points

• Markets across Europe aim to pare last week’s losses, Stoxx 600 moderately higher
• US equity futures point to the upside, Dow futures higher by more than 150 points

European stocks opened modestly higher after a slip last week. In the early hours of Monday’s session, investors in Europe attempt to stage a comeback in all major European indexes. Despite a Friday attempt to pare some losses from previous trading sessions, equities in the bloc ended lower across the board.

Driving the losses were concerns over unwinding global monetary policy. Increased Delta variant cases further darkened the economic outlook for stocks in the old continent.

The pan-European Stoxx 600 finished the week lower by 1.5%, logging its worst weekly performance since February. The six-month low for the broad-based benchmark was driven by signs of a slowdown in the global economic recovery.

Friday’s market action lifted major stock indexes in Europe. UK’s FTSE100 led the gains, ending the day higher by 0.41%. France’s CAC40 advanced 0.31%, while Germany’s DAX closed up 0.27% after a better-than-expected producer prices report showed a 1.9% increase for July, on a monthly basis.

Global stocks had the worst week since June, dragged lower by lingering uncertainty over the possible reduction in monetary stimulus injected in the US economy by the Federal Reserve. Investors flocked to haven assets among currencies and commodities such as the US dollar, the Japanese yen, and gold.

An Optimistic End of the Week for US Investors

Stateside, stocks on Wall Street rebounded Friday but remained in negative territory for the week. Major US equity indexes declined after the Federal Reserve announced it will most likely begin tapering, or dialing back, its easy-money policies.

The meeting minutes released by the US central bank on Wednesday indicated the majority of Fed officials have reached a consensus to reduce the extraordinary support of $120bn in monthly asset purchases that have underpinned the economic recovery for over a year.

By Friday, US investors were once again optimistic and betting heavily on stocks. In efforts to reverse the course of major indexes, market participants lifted the Dow Jones Industrial Average by over 220 points on the day. The S&P500 added more than 35 points, while the tech-centred Nasdaq Composite jumped nearly 1.20%.

While the three equity benchmarks recouped some losses on Friday, the Dow Jones declined by 1.1% on the week. The S&P500 ended down 0.6%, while the Nasdaq Composite closed lower by 0.7%.

Futures markets in the US are aiming to produce a higher open at the bell today. As market participants on Wall Street prepare to enter the day, futures on the Dow Jones Industrial Average hover in the green by around 150 points. Futures contracts on the S&P500 are higher by roughly 15 points. Nasdaq futures are also positive, up around 50 points.

Cryptocurrencies moved mostly higher over the weekend and have so far extended their gains into the Monday session. Late on Sunday, bitcoin pierced through the $50,000 milestone and is currently trading above $50,200 per coin.

The leading digital currency has gained 70.5% in about a month. The strong rally came against the backdrop of regulatory pressures from China, coupled with critical commentaries about the environmental impact of the mining process involved in the creation of Bitcoin.