European Stocks Gain to One-Month High as Omicron Fears Ease
(Bloomberg) -- European equities climbed to the highest level in a month as the latest coronavirus studies fueled optimism that economic growth can withstand omicron risks.
The Stoxx Europe 600 rose 1% by the close in London, posting the biggest three-day gain since November 2020. Travel and leisure and bank shares were among the top gainers.
The omicron variant appears less likely to lead to hospitalizations than the delta strain, according to preliminary data from studies. Pills to treat Covid-19 from Pfizer Inc. and Merck & Co. gained clearance for emergency use in the U.S., delivering a more convenient treatment option for at-risk patients at a critical point in the pandemic. Also, AstraZeneca Plc said its booster shot significantly increased levels of antibodies against omicron.
Incremental news on omicron isn’t getting worse, the approval of the Pfizer pill is helpful, and the European Central Bank is prepared to remain dovish, “supporting growth prospects and sentiment for European stocks,” said Esty Dwek, chief investment officer at Flowbank SA. “The Santa rally might have been delayed, but it should still happen.”
European stocks have been rising in recent days after coming under pressure as the omicron variant led to new restrictions and amid a hawkish shift in central bank policies. However, many major asset managers continue to favor stocks and see them as the best vehicle for returns as bond yields remain low.
While stocks have been eking out gains in recent days, volumes are getting thinner ahead of the holidays.
“I would classify this bounce as a relief rally, but it’s not sustainable yet,” said Alberto Tocchio, a portfolio manager at Kairos Partners. “I would not buy here and wait for some further news and studies on omicron, Biden’s fiscal plan.”
Among individual movers, Flutter Entertainment rose after striking a deal to buy Italian gambling operator Sisal in a $2.2 billion transaction. Prosus NV climbed in Amsterdam, mirroring gains in Tencent Holdings Ltd. after it declared a special dividend by handing out $16 billion of JD.com Inc. shares. And Koninklijke Philips NV jumped after company provided an update on ventilators that were recalled due to health concerns.
- Equities: Euro Stoxx 50 up 1.2%, FTSE 100 up 0.4%, DAX up 1.0%, CAC 40 up 0.8%, FTSEMIB up 0.7%, IBEX 35 up 1.2%, AEX-Index up 1.3%, Swiss Market Index up 0.6%
- Bonds: German 10-year-yield up 4bps at -0.25%, Italian 10-year-yield up 5bps at 1.1%, Spanish 10-year-yield up 4bps at 0.5%
- Credit: iTraxx Main down 1.7bps at 48.3, iTraxx Crossover down 8.9bps at 242.9
- FX: Euro spot down 0.12% at 1.1312, Dollar index up 0.08% at 96.15
- Commodities: Brent crude up 1.0% at $76.0/bbl, copper up 0.2% at $9,623/MT, iron ore down 0.2% at $113.78/MT, gold up 0.2% at $1,806.59/oz
- 20 out of 20 Stoxx 600 sectors rise; consumer products & services sector has the biggest volume at 79% of its 30-day average; 481 Stoxx 600 members gain, 113 decline
- Top Stoxx 600 outperformers include: Daimler Truck Holding +4.9%, Prosus +4.6%, Aegon +4.6%, Watches of Switzerland Group +4.3%, Sandvik +4.2%
- Top Stoxx 600 underperformers include: Allegro.eu -6.2%, EQT -4.1%, Aker BP -3.6%, Verbund -3.4%, Dechra Pharmaceuticals -2.3%
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