European markets face Covid headwinds
LONDON — European stocks advanced on Thursday as investors continued to monitor the Covid crisis in the region and political developments in Germany.
The pan-European Stoxx 600 added 0.5% in early trade, with tech stocks climbing 1% to lead gains while telecoms shed 0.5%.
Investors are digesting the latest news out of Germany where a new coalition government deal between the Social Democrats, Greens and Free Democrats was announced on Wednesday.
The agreement will see Olaf Scholz, Germany’s former finance minister, become Germany’s new chancellor when Angela Merkel leaves the post in early December.
European investors continue to monitor the acute Covid crisis in the region this week amid rising infections that have prompted a handful of countries to introduce new Covid restrictions.
Italy announced Wednesday evening that it will introduce tighter Covid measures and Germany has narrowly avoided another lockdown with the incoming coalition reportedly wanting to wait and see if tighter Covid passport rules help to alleviate rising cases there. Nonetheless, incoming German leader Olaf Scholz said Wednesday that vaccinations are to be made compulsory for targeted groups.
Overnight in Asia-Pacific markets, shares were mixed as investors reacted to the Bank of Korea’s decision to raise its policy rate to 1%. The South Korean central bank’s decision followed a similar move by the Reserve Bank of New Zealand on Wednesday.
U.S. markets are closed Thursday for Thanksgiving and will close early on Friday in a shortened session.
On the data front, Germany’s third-quarter gross domestic product (GDP) grew by 1.7% quarter-on-quarter, fractionally below expectations, official statistics revealed Thursday.
Germany’s GfK consumer sentiment barometer showed that spiking inflation and the surge in Covid-19 cases is weighing on consumer morale heading into December. The survey fell to -1.6 points from a revised 1.0 in November.
In terms of individual share price movement, Remy Cointreau surged more than 9% in early trade to lead the Stoxx 600, after the French drinks group beat first-half profit expectations and raised its full-year outlook.
At the bottom of the European blue chip index, British instrumentation company Spectris dropped 5% after Morgan Stanley downgraded the stock to “underweight” and cut its target price.
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