What’s happening: European stocks climbed to a new ten-month high on Tuesday just a day after Wall Street stocks surged to record levels.
What happened: Market sentiment in Europe was lifted by the rally in US stocks on Monday after President Donald Trump signed the $900 billion covid-19 relief package.
The signing of the Brexit trade deal and the commencement of coronavirus vaccination campaigns in various countries also helped the pan-European index record gains for a fifth consecutive session.
Why it matters: European stocks extended gains yesterday, US stocks jumped to record highs on Monday as President Trump signed the massive coronavirus rescue bill into law, which includes direct payment cheques of $600 to individuals. The US President continued to push for cheques of $2,000 even after signing of the bill. The House later voted to increase the direct payments, which awaits clearance from the Senate.
Investors also cheered the signing of the long-awaited Brexit trade deal between the EU and Britain on Christmas Eve, helping London’s FTSE 100 index record gains of 1.6% on Tuesday. The deal, which was approved by ambassadors from 27 Eurozone member nations, will be implemented from January 1, 2021.
While the agreement clears near-term doubts over trade between the two regions, there is still uncertainty around the EU granting the UK access to Eurozone’s financial market.
Shares of AstraZeneca were among the top performing stocks on the FTSE index, which were boosted by expectations of the company’s covid-19 vaccine receiving approval in the UK.
The new strain of the covid-19 virus found in the UK remains a source of concern for markets, with the new variant spreading faster than the original one. Britain reported more than 41,000 new cases on Monday, the highest daily rise recorded by the country.
The pan-European Stoxx 600 index gained 0.76% on Tuesday, with most sectors closing in the positive zone. Travel and leisure stocks were among the top performers, driven by the launch of a vaccination drive in the EU.
The German DAX 30 index surpassed the 13,900 level for the first time ever yesterday but cut back gains to settle lower by 0.2% at 13,761. Meanwhile, the French 40 added 0.4% to settle at 5,612 on Tuesday, ending at its strongest level since February 26.
What to watch: Investors will continue to focus on the covid-19 vaccine rollout in EU countries. Markets will also closely monitor developments around the approval of AstraZeneca’s vaccine in the UK. Rising covid-19 cases will also remain a major concern for investors, with total infections surpassing 81.9 million worldwide.
Spain is scheduled to release inflation and current account data, while Britain will be reporting the nationwide house price index.