European stocks and U.S. equity futures climbed to start a new week, gaining on hopes for a U.S. stimulus package and after Chinese growth data showed that economy continues to recover from the COVID-19 pandemic.
Trading was disrupted by a glitch at Euronext, which tweeted that a technical problem had halted trading in all products, and that it was working to get the problem resolved. That affected trading in Paris, where the French CAC 40 was up 0.8% ahead of the halt, as well as trading in Belgium, Portugal, Ireland and the Netherlands.
The Stoxx Europe 600 index rose 0.5% to 369, after a 0.8% drop for last week and the German DAX rose 0.3%.
The FTSE 100 was flat. U.K. stocks struggled as the pound found renewed strength on Monday, rising 0.7% to $1.3000. The pound shrugged off a ratings downgrade for the U.K. from Moody’s rating agency, which cited concerns over the economic hit to the economy and fears of a ‘no-deal’ Brexit.
Some attributed the pound’s rise to senior British lawmaker Michael Gove, who said on Sunday that the door is “still ajar” for post-Brexit talks with the European Union, after Prime Minister Boris Johnson said on Friday that trade talks won’t continue without a shift in position from the single-currency region.
Dow futures climbed 0.8% or over 200 points, with S&P 500 and Nasdaq-100 futures up around 1% each, after Wall Street equities closed mostly higher on Friday and eked out gains for the week.
House Speaker Nancy Pelosi on Saturday set a 48-hour deadline for the White House to strike a deal with Democrats to agree a stimulus package before the presidential election. She added that she was “hopeful” over a deal, after late Saturday discussions with Treasury Secretary Steven Mnuchin.
“Markets, for now, are merely relieved that at least the two sides continue to talk. Nor do they seem concerned that U.S. Senate Republicans seem unlikely to pass a massive stimulus bill, as they seek to out some clear air between themselves and a president well behind in the polls,” said Jeffrey Halley, senior market analyst at OANDA, in a note to clients.
Many see a stimulus package as vital, with U.S. coronavirus cases building into a third wave. Friday saw 70,000 new cases reported, the most since July.
Investors will hear from several central bankers on Monday, including Federal Reserve Chairman Jerome Powell and European Central Bank President Christine Lagarde.
Data from China showed the economy grew 4.9% in the third quarter. While falling short of expectations, China’s growth is now closer in line with forecasts made at the start of the year before the deadly pandemic began to sweep across the globe.
That is in contrast to Europe, where “the latest round of COVID-19 curfews threaten to derail any tentative economic progress which has been made,” said Richard Hunter, head of markets at Interactive Investor, in a note to clients. The U.S., meanwhile, recorded 70,000 new cases on Friday, the most since July.
A busy earnings week kicked off with results from several European companies on Monday.
Shares of Julius Baer climbed nearly 5% after the Swiss private banking group reported rising assets under management and gross margin, which analysts at Jefferies said came in stronger than expected. The company added that 2020 results will be hit by goodwill impairments, due to its Italian asset and wealth company.
Philips reported that third-quarter net profit exceeded expectations. The Dutch medical-technology group said the company is targeting accelerated sales growth and higher profitability in the 2021-2025 period. Shares rose nearly 3% ahead of the trading halt.
Groupe Danone reported lower third-quarter sales that fell s short of analysts expectations. But the food giant restored guidance for the full year and laid out a comprehensive organizational and portfolio review. Danone shares rose 2.4% ahead of the trading halt.
On the downside, shares of SAAB slid 7.5% after the Swedish defense group reported a drop in operating profit for the third quarter. “Due to the ongoing recovery and drawn-out recovery, SAAB now sees an increased risk due to the effects of COVID-19,” Micael Johansson, president and chief executive officer, said in the earnings statement.