European stocks pushed ahead at midday on Tuesday as Wall Street rallied overnight, pushing aside concerns over the suspension AstraZeneca’s Covid vaccine in several European countries.
The pan-European STOXX 600 index rose 0.51% in early trade after an overnight rally on Wall Street on hopes of an economic recovery and $1.9trn US stimulus package.
“With the Dow Jones closing above 32,900, Europe felt confident this Tuesday in reclaiming some of the ground given up following Monday’s spate of Oxford vaccine suspensions,” said Spreadex analyst Connor Campbell.
Worries increased about the pace of Europe’s Covid-19 vaccine rollout after a number of European nations, including Sweden, Germany, France, Spain, and Italy, suspended use of the AstraZeneca vaccine in recent days following reports of blood clotting in some patients.
Investors were also eyeing the US Federal Reserve’s views on a recent pick-up in inflation which has pushed bond yields higher and increased concerns about a rise in the cost of borrowing. The Fed so far has been downplaying those concerns.
Euro zone government bonds held ground in early trade, as caution set in ahead of the Fed meeting.
“The ideal situation for the markets would be the central bank saying, “Yes, we’re concerned about inflation and we’re going to step in and prevent inflation going too high,” said Campbell.
“Though the issue is going to be that the Fed is completely comfortable with inflation hitting 2% or higher.”
In Germany, a survey by the ZEW economic institute conducted before the vaccine suspension showed investor sentiment increased by more than expected in March, buoying the outlook for a broad-based recovery.
In equity news, shares in retailer Zalando jumped 4.35% after it forecast 2021 revenue growth above market expectations following a strong start to the year. Its shares touched a three-week high and lifted the wider retail index.
Volkswagen AG was up 6.4% after the world’s second-largest carmaker said it was confident that cost cuts will help it improve profit margins in the coming years.
Greggs rallied after the bakery chain – famous for its sausage rolls – swung to an annual loss in 2020 for the first time in its history as its sales were hit by closures related to the Covid-19 pandemic, but said trading so far this year was better than expected.
It posted a pre-tax loss of £13.7m, having said in January that the loss could be as much as £15m.
On the downside, NatWest lost ground after Britain’s Financial Conduct Authority started criminal proceedings against the bank for money laundering. The FCA said NatWest allegedly accepted “increasingly large cash deposits” totalling £365m into the accounts of a UK incorporated customer between November 2011 and October 2016, including £264m in cash.
German biotech firm Morphosys slumped 10.15% after forecasting a fall in 2021 revenue.
