European Stocks Higher; Central Bank Meetings Seen as Key

  • Stock Market News
European Stocks Higher; Central Bank Meetings Seen as Key
Credit: © Reuters.

By Peter Nurse - European stock markets traded higher Tuesday, rebounding from a weak start to the week as investors digested the spread of the Omicron Covid variant ahead of three key central bank meetings in Europe and the U.S. 

At 3:45 AM ET (0845 GMT), the DAX in Germany traded 0.4% higher, the CAC 40 in France rose 0.6% and the U.K.’s FTSE 100 climbed 0.6%. 

Investors are firmly focusing on policy-setting meetings from a number of high profile central banks, including the Bank of England and the European Central Bank in Europe, but probably more importantly the U.S. Federal Reserve .

The Fed starts its two-day meeting later Tuesday, and is widely expected to discuss a faster taper of its massive bond-buying program, which could move it one step closer to raising interest rates. 

This follows consumer prices climbing 6.8% in annual terms in November, the largest rise since 1982.

European equities weakened Monday as investors fretted about developments surrounding the Omicron variant of the Covid-19 virus, including the confirmation of the first U.K. death.

Additionally, a study released late Monday from the University of Oxford showed that two doses of established Covid-19 vaccines are substantially less effective at combating Omicron compared with previous variants of the coronavirus, emphasizing the need for a booster shot.

On Tuesday, U.K. unemployment fell almost 50,000 in November and the unemployment rate dropped to 4.2% in October, good news ahead of Thursday’s Bank of England meeting. Growth in employment over the last quarter slowed below expectations, however.

The BoE surprised the market by not raising interest rates last month despite high inflation, but policymakers opted for caution and are expected to do so again, given the arrival of Omicron and the imposition of new restrictions. The U.K. health agency estimates that Omicron infections are currently running at around 200,000 a day, far in excess of official statistics.

In corporate news, Ocado (LON: OCDO ) stock rose 3.7% after the online grocer stated that fourth-quarter trends reflect strong momentum in underlying demand, with its best-ever Christmas ahead. Things could have been even better for the company as customers stick with online shopping, with growth held back by labor shortages. The group also said it won a patent infringement lawsuit filed by the Norwegian robotics firm AutoStore last year.

ArcelorMittal (AS: MT ) stock climbed 4.2% after the world's largest steelmaker said it had intended to repurchase some convertible notes as part of a $395 million buyback program.

Oil prices edged higher Tuesday, helped by the Organisation of Petroleum Exporting Countries raising its world oil demand forecast for the first quarter of 2022 on Monday, expecting the Omicron variant to have a mild and temporary impact. 

Gas prices continued to climb, hitting a new record high amid rising tensions between Russia and Ukraine, which threaten to explode into violence.Germany Foreign Minister Annalena Baerbock ruled out the approval of the Nord Stream II pipeline, which would transport gas from Russia to western Europe across the Baltic Sea, in the near term, saying the legal conditions for its approval for regulators still haven't been met.

By 3:45 AM ET, U.S. crude futures traded 0.8% higher at $71.88 a barrel, while the Brent contract rose 0.8% to $75.00.

Additionally, gold futures fell 0.2% to $1,783.95/oz, while EUR/USD traded 0.1% lower at 1.1277.



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