Europe Opens Higher After Late Run on Wall Street
Fiona Cincotta September 25, 2020 8:42 AM
US fiscal stimulus optimism lifts sentiment & pulls on USD, boosting commodity prices. FTSE miners & oil majors rise
European stocks are heading out of the blocks on the front foot after a late run higher on Wall Street.
The prospect of additional fiscal stimulus to support the stalling economic recovery in the world’s largest economy is boosting sentiment even as covid cases in Europe unnerve investors. There is a good chance the EU might also need to dip its hand in its pocket again.
The likelihood that EU will need to agree to further stimulus as well is rising. Data earlier this week showed that the economic recovery in the eurozone is on very shaky ground with service sector activity already back in contraction. With covid cases rising in the old continent and further tightening restrictions almost certain over the coming weeks, the chances of a double dip recession are rising.
The FTSE is managing to advance, as the prospect of additional US stimulus is dragging on the US Dollar, offering some relief to the battered commodities. As commodity process rise on the weaker dollar, heavy weight miners and oil majors are advancing.
Vaccine news is not offering support to sentiment. Novavax started a late stage trial of its covid-19 vaccine candidate in partnership with the British government’s Vaccine Taskforce. With UK covid cases reaching 6,634 over the past 24 hours and restrictions being tightened to stem the spread of the virus, any even mildly positive vaccine news is welcome right now.
In other Vaccine news, AstraZeneca has struck a deal with the EU to receive partial immunity from risks involved with the speedy roll out of its covid-19 vaccine. The EU have agreed to pay claims over certain side effects above a certain limit, shifting the liability of risks associated with such a quick vaccine development away from the drug maker to the taxpayer. However, the news has failed to lift the share price.
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