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Markets

European shares up for fourth session on stimulus, vaccine optimism

  • German DAX jumps 0.8%, Briish blue-chips fall 0.3%.
  • BoE stands pat on policy, awaits Brexit trade deal decision.
  • Signature Aviation rockets 40%.
  • Rio Tinto up, appoints CFO Stausholm as new CEO.
Published December 18, 2020
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European shares held near 10-month highs on Thursday, as hopes of more stimulus in the United States and potential COVID-19 vaccine rollouts in Europe strengthened the case for a global economic recovery.

Germany's DAX climbed 0.8% to close at its highest since February, while the pan-European STOXX 600 index rose 0.3%, both extending gains to a fourth straight session.

With the pound surging as Brexit trade talks progressed and as the Bank of England stood pat on policy awaiting the fate of the deal, London's FTSE 100 lagged 0.3%.

"As long as there is a Brexit deal by 31st December 2020, we don't think (BoE) will need to loosen policy next year either," said Tom Pugh, an economist in Capital Economics' UK team.

Topping the STOXX 600 were shares of Singature Aviation , rocketing 40.1% and conglomerate Thyssenkrupp surging 11.3%, both up on merger and acquisition chatter.

Meanwhile, Germany and France said they were set to begin inoculating their citizens with the Pfizer-BioNtech vaccine in the last week of December, once it is approved by the European Medicines Agency.

In the United States, lawmakers are inching closer to a $900 billion stimulus package, while the Federal Reserve promised to keep funnelling cash into markets until the US economic recovery is secure.

This comes after the European Central Bank rolled out more stimulus measures last week.

Aggressive monetary support has helped the STOXX 600 come closer to pre-pandemic levels, but it still remains about 8% below its high this year.

A resurgence in COVID-19 cases leading to more curbs had dented the recovery path in October, but vaccine optimism put it back on track until Brexit concerns slowed the pace.

"There's just optimism around a deal both in the United States and Brexit. These are the two major issues that are still outstanding for the year and both of them appear to be on a positive trajectory and could be wrapped up over the next few days," said Craig Erlam, senior market analyst at OANDA Europe.

Shares of WPP Plc jumped 4.2% as the world's biggest advertising firm said it expects to return to its 2019 level of net sales by 2022.

The basic materials index rose, with Rio Tinto up 1.0% after the miner appointed Chief Financial Officer Jakob Stausholm as its next chief executive.

Novartis climbed 1.2% after the drugmaker said it would acquire US-based neuroscience company Cadent for up to $770 million.

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