Europe midday: US stimulus prospects continue to cheer investors

by | Jan 7, 2021

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(Sharecast News) – European shares were still higher at lunchtime on Thursday as investors were cheered by the prospect of a larger US stimulus package after the Democrats took control of Congress and Joe Biden’s presidential election win was confirmed amid extraordinary scenes in Washington.

The pan-European Stoxx 600 index rose 0.29% with the UK’s FTSE 100 down 0.34% and Germany’s DAX 0.49% higher.

US futures were higher on the Biden news, shrugging off Wednesday’s invasion of the Capitol by a mob incited by President Donald Trump, disrupting the certification of electoral college votes confirming the veteran Democrat as the 46th president.

 
 

“No one can accuse the US of tending to lethargy. Turmoil in Washington D.C. has been largely shrugged off by global markets, as investors bet more stimulus and fiscal expansion from a Democrat-controlled Congress will be the driving force for the upside to show more gains,” said Markets.com analyst Neil Wilson.

“Any whispered concerns about higher taxes and more regulation are being shouted down by the prospect of more spending,” Wilson added.

Shares on the continent were also lifted by an upbeat sales forecast from French construction firm Saint Gobain after it said fourth-quarter results would significantly exceed expectations.

 
 

Sentiment was further boosted by data showing demand for German-made goods rose 2.3% in November, higher than expected, showing Europe’s largest economy was bearing up to the pressures of the coronavirus pandemic.

“European markets have shrugged off the scenes since it most think it shouldn’t amount to much more than a rather bizarre, unfortunate (and deadly) footnote in the history of the Trump presidency. Following the protest Joe Biden has now been confirmed as president which should hopefully draw a line under the last four years and deliver more certainty to the market,” Wilson said.

In equity news, shares in Lundin Energy gushed after the company won permission to drill an exploration well close to its Solveig discovery in the Norwegian North Sea.

 
 

Sainsbury’s stock was higher after the UK supermarket giant lifted full-year profit guidance to at least £330m from the previous guidance of around £270m on higher champagne and steak sales as hemmed in Brits treated themselves over the festive period.

Bargain retailer B&M also reported a strong third quarter with sales up 22.5% on a constant currency basis. The company also said it would return £200m to shareholders with a 20p special dividend.

Delivery Hero slipped as the German food delivery firm said it had raised around 1.2bn by issuing new shares to fund growth.

Shares in Trainline fell sharply after the company said it was selling £150m of convertible bonds to shore up its finances against a potential extended Covid-19 downturn in ticket sales.

Mitchells & Butlers shares tumbled 7.6% after the UK pub operator said it was exploring an equity capital raise as a new national lockdown shut its sites across England.

LafargeHolcim shares were up after the world’s biggest cement maker said it would buy Firestone Building Products from Bridgestone Americas in a deal worth $3.4bn.

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