Economic news

European Stocks Rise on Strong Earnings

European stocks and U.S. futures made gains early on Wednesday, despite a concoction of risks sending gold above $2,000 an ounce for the first time in history.

A raft of positive earnings, including from German bank Commerzbank, and further signs of an economic recovery in the form of positive data, helped stocks higher while investors awaited a fresh U.S. stimulus package.

The pan-European Stoxx 600 index rose 0.6% in early trading, while Germany’s DAX was 0.9% higher and the French CAC was 0.8% up. U.S. stock futures also moved higher, implying a 178 point gain for the Dow Jones Industrial Average at the open.

Business activity in the eurozone returned to growth in July, albeit slightly below economists’ expectations, with especially strong growth in France and Germany, according to the closely followed purchasing managers index. Spain and Italy also recorded renewed growth despite recent signs of spikes in coronavirus cases. Growth in China’s services sector slowed in July from the decade highs of June but continued to expand.

Despite the tentatively positive data, rising coronavirus cases around the world and escalating tensions between the U.S. and China over videosharing app TikTok created enough uncertainty for gold prices to surge. The precious metal climbed to new highs overnight, with gold futures reaching $2,050 and spot gold trading at $2,031 around the European open.

“While the markets continue on a cautious recovery path, the big move for gold through the $2,000 per ounce threshold is a reminder of the lingering fears over coronavirus and geopolitical tensions linked to China,” AJ Bell investment director Russ Mould said.

The U.S. and China have agreed to high-level talks on Aug. 15 to assess Beijing’s compliance with the bilateral trade deal signed earlier this year, The Wall Street Journal reported.

Stocks in focus

Commerzbank stock climbed 4.7%, after Germany’s second biggest bank beat expectations with a 21% fall in profit to €220 million ($260 million) as it managed to lower its cost base in the second quarter.

European airlines gained substantial ground as renewed optimism swept through the sector. Budget carrier easyJet said on Tuesday it was adding more flights to reflect the increased demand for summer holidays. The upbeat mood continued into Wednesday, with British Airways owner IAG rising 8% and German airline Deutsche Lufthansa up 6.8%. 

BMW stock slipped 3.1%, after the German automobile maker posted a €666 million loss in the second quarter as the pandemic hit car sales.

Source: Marketwatch

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree