European and US stocks push higher on stimulus optimism

LaToya Harding
·3 min read

Watch: European stocks rise to start the week

European stocks pushed upwards on Monday on renewed optimism over US economic stimulus plans, with the FTSE 100 (^FTSE) closing 0.53% higher, ending above the 6,500 points mark.

The French CAC (^FCHI) was 0.69% higher, while the German DAX (^GDAXI) advanced 0.21%, lagging slightly behind its peers as new data showed industrial output failed to grow in the country for the first time in eight months during December. The 0% change fell short of economists’ predictions of a 0.3% gain.

The Euro Stoxx index (^STOXX) — which measures shares across all those markets and more — rose by 0.44%.

Miners and the oil companies were amongst the leaders as oil prices climbed back to their pre-pandemic levels, surging to $60 (£44) a barrel.

Prices have been boosted recently thanks to rising demand across the world, particularly in Asia — China is the world’s second-largest oil user. Experts added that a weaker dollar was also providing a boost to commodities.

WASHINGTON, DC - FEBRUARY 5: President Joe R. Biden walks to board Marine One and depart from the South Lawn at the White House on Friday, Feb 05, 2021 in Washington, DC. (Photo by Jabin Botsford/The Washington Post via Getty Images)
US president Joe Biden at the White House in Washington, DC. Photo: Jabin Botsford/The Washington Post via Getty

Connor Campbell, analyst at SpreadEx, said: “At the start of a slightly quieter week when it comes to data, the European markets continued to ignore the rampant spread of the various COVID variants, instead clinging onto their hopes that Biden will force through his fat stimulus package in the coming weeks.”

However, he added that the FTSE was being pinned back by concerns over the efficacy of the AstraZeneca (AZN.L) Oxford vaccine.

Over the weekend a small study suggested the drugmaker’s vaccine with Oxford University struggled to protect against mild to moderate illness among the young caused by the South African variant of COVID-19.

The research from the University of Witwatersrand and Oxford University led the South African government to halt use of vaccine among healthcare staff.

READ MORE: AstraZeneca shares wobble as South Africa halts vaccine rollout

Across the pond, S&P 500 (^GSPC) was 0.24% up as markets in Europe closed for the day, while the Dow Jones (^DJI) climbed 0.33% on hopes a $1.9tn coronavirus aid package will be passed by US lawmakers as soon as this month. The tech-heavy Nasdaq (^IXIC) was also 0.33% higher.

Richard Hunter, head of markets at Interactive Investor, said: “The stars are aligning for US markets, which could have positive repercussions for sentiment elsewhere.

“The need for stimulus was further underlined by the non-farm payroll numbers, and a budget outline approved by lawmakers appears to have placed President Biden’s relief plan on the brink of success. Although the eventual amount may be subject to some compromise, the injection it will provide to economic recovery will likely be substantial.”

READ MORE: UK firms faces £60bn debt as economy struggles from COVID

Asian shares closed near record highs on Monday. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3% to 717.2 after climbing as high as 730.16 late last month.

Japan's Nikkei (^N225) jumped 2.12% while Australian shares also advanced on the back of technology and mining shares. Chinese shares were mildly positive with the Hang Seng (^HSI) up 0.12% and the Shanghai Composite (000001.SS) gaining 1.03%.

Hopes of a quicker economic revival and supply curbs by producer group OPEC and its allies pushed oil to its highest level in a year, it is currently more than $60 a barrel.

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