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European Stocks Mixed; German Autos Help DAX Outperform

Stock MarketsMar 18, 2021 08:59
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By Peter Nurse - European stock markets traded in a mixed fashion Thursday, with strong autos gains helping Germany’s DAX index outperform following a reassuring statement from the Federal Reserve.

At 3:55 AM ET (0855 GMT), the DAX in Germany traded 0.7% higher, climbing to a new all-time high, the CAC 40 in France grew 0.1%, while the U.K.'s FTSE index was 0.2% lower.

The Federal Reserve concluded its two-day policy meeting on Wednesday, and reassured investors that it was committed to maintaining an accommodative monetary policy for some time. 

Chairman Jerome Powell indicated that while inflation is expected to reach 2.4% this year, above the central bank's 2% target, this would be a temporary surge and he did not currently see the Fed raising its benchmark overnight interest rate through 2023. The central bank also projected the U.S. economy will grow by a massive 6.5% this year.

The news that the world’s largest economy, and global growth driver, was set to expand strongly without near term interest rate hikes has resulted in strong gains in the economically sensitive sectors in Europe, led by automakers and banks.

Volkswagen (DE:VOWG_p) stock jumped 10%, continuing recent gains which have made the car manufacturer the most valuable company in Germany's DAX, as it makes a jump into the electric car market.

BMW (DE:BMWG) stock also rose 3.7%, continuing Wednesday’s gains after it was upbeat on its own electric car sales.

Renault (PA:RENA) stock rose 3.4% after it announced Thursday that it will collaborate with Solvay (BR:SOLB) and Veolia Environnement (PA:VIE) to recycle electric-vehicle batteries.

In the banking sector, Credit Suisse (SIX:CSGN) stock climbed 2% despite Swiss bank’s annual report showing its executives earned 12% less in total compensation in 2020.

The stocks of Banco BPM (MI:BAMI), Unicredit (MI:CRDI), Intesa (OTC:ISNPY), BBVA (MC:BBVA), Caixabank (MC:CABK), Bankia (MC:BKIA) and Societe Generale (OTC:SCGLY) all hit 52-week highs Thursday.

However, it's not all good news. The European Medicines Agency’s safety review into the controversial Covid-19 vaccine developed by AstraZeneca (NASDAQ:AZN) and the University of Oxford is due to be released later Thursday. This follows several European countries delaying their vaccination programs further by pausing the use of this vaccine over blood clot safety concerns.

Additionally, in the U.K., which has been one of the vaccination success stories, the country’s National Health Service warned of a "significant reduction in the weekly supply" of vaccines next month, citing supply issues. 

The Bank of England will hand down its latest policy decision later in the session, but the market isn’t expecting any significant changes.

Oil prices weakened Thursday after data from the U.S. Energy Information Administration showed another rise in U.S. crude inventories, of 2.4 million barrels last week, prompting worries of a sustained hit to demand.

U.S. crude futures traded 1% lower at $63.94 a barrel, while the Brent contract fell 1% to $67.29.

Additionally, gold futures rose 0.5% to $1,735.05/oz, while EUR/USD traded 0.3% lower at 1.1945.


European Stocks Mixed; German Autos Help DAX Outperform

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