European Stocks Rise as Focus Turns to Earnings, U.S. Stimulus
(Bloomberg) -- European equities eked out small gains Monday, as investors took a breather following last week’s rally, ahead of the start of earnings reporting and the U.S. government handover.
The Stoxx Europe 600 Index gained 0.2% by the close in London. Technology stocks outperformed, led higher by chipmaker Infineon Technologies AG after an analyst upgrade. Stellantis NV, the carmaker created through PSA Group’s merger with Fiat Chrysler Automobiles NV, was Europe’s best-performing stock on its first day of trading.
Investors are preparing for the year’s first earnings season, with expectations running high after an equity rally that has seen the Stoxx Europe 600 add almost 20% since the end of October. While Biden’s $1.9 trillion Covid-19 relief plan has contributed to a surge in global stocks, his proposals could be watered down under congressional opposition.
“We’re picking up from where we left off on Friday,” CMC Markets chief market analyst Michael Hewson said in an interview. “We’ve seen a bit of a schizophrenic start to 2021, with excessive optimism in the first week followed by more caution.”
Hewson highlighted rising doubts about two key drivers of recent optimism -- namely a speedy exit from Europe’s lockdowns and the next U.S. administration’s ability to get a greater relief package through Congress.
Concerns about Europe’s ability to quickly return to normal have been fanned by Germany’s deliberations on escalating lockdown measures that may include curfews.
U.S. financial markets are closed for the Martin Luther King holiday.
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