What’s happening: European stocks closed higher on Friday, recording their strongest weekly surge since November.
What happened: Markets cheered news of the Democratic Party winning the US Senate race, which is expected to result in a higher fiscal stimulus package.
Germany’s DAX index also surged to a fresh high following upbeat economic reports and earnings results from various chipmakers.
Why it matters: The Democrats won the Senate runoffs in Georgia, resulting in the Party’s control of the upper chamber, which is expected to result in increased spending and borrowing to provide more support to the economy amid rising covid-19 cases.
President Donald Trump said that there would be a smooth transition to President-elect Joe Biden on January 20, after his supporters stormed into the Capitol to derail Congressional proceedings to confirm Biden’s win in the election. Various social networking sites, including Facebook and Twitter, suspended Trump’s accounts following the violence last week by his supporters.
The S&P 500 and Nasdaq 100 surged to fresh highs on Friday despite the Labor Department’s report showing that the US economy had surprisingly shed jobs in December.
Markets also cheered positive news related to the covid-19 vaccine, after a laboratory study showed the effectiveness of the Pfizer-BioNTech’s vaccine against the new strain of the virus.
Investor sentiment was further lifted by the European Commission reporting an improvement in the Eurozone’s economic sentiment indicator in December, while the inflation rate remained in the negative zone. The bloc’s unemployment rate also declined to 8.3% in November, from 8.4% in the prior month.
European tech stocks moved higher on Friday, with various chipmakers posting solid gains after global peers Samsung Electronics and Micron Technology reported upbeat earnings reports. Travel stocks also received a boost after French company Sodexo lifted its margin forecast for the first half of the year.
The pan-European STOXX 600 index closed higher by 0.7% on Friday, to record gains of 3% for the first week of 2021. Germany’s DAX 30 index hit a new record high, adding 0.6% on Friday, after the country released encouraging economic data. Industrial production in Germany rose 0.9% in November, versus a 3.4% rise in October, exceeding the consensus estimate of 0.7%.
London’s FTSE 100 index rose only 0.2% on Friday but recorded a 6% surge for the week. The UK’s regulator’s approval of Moderna’s covid-19 vaccine lifted market sentiment. The UK was the first country to approve vaccines by Pfizer and AstraZeneca.
What to watch: With no major economic data due to be released today, markets will continue to focus on the developments in the US related to the transition of power to Biden’s administration.
Rising covid-19 cases remains a major concern for investors, with the total worldwide cases surpassing 90.2 million.