December 9, 2022

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Business is my step

European Stocks Usher In New Year With Bumper Gains

3 min read

European stock markets rallied Monday, boosted by fervent takeover activity, Brexit relief and vaccine-driven economic optimism on the first trading day of 2021.

London’s FTSE 100 shares index fizzed 3.0 percent higher on its first day since Britain finalised a divorce from the European Union last week, as dealers noted no signs of the Brexit chaos some had feared.

The pound scored a 2.5-year peak at $1.3704 to extend last week’s impressive run after the announcement of a breakthrough Brexit trade deal on Christmas Eve. It later pulled back somewhat.

Oil hit ten-month highs before a virtual gathering of crude producing cartel OPEC and its allies to decide February output levels, after coronavirus ravaged demand in 2020.

Bitcoin retreated on Monday to $30,600, one day after surging to an all-time pinnacle near $35,000 as risk-seeking investors piled into the cryptocurrency.

“The FTSE 100 is kicking off 2021 in style… With Brexit finally here, there are precious few signs of initial difficulties,” said IG analyst Joshua Mahony.

Britain finally left the EU’s single market and customs union late on December 31, ending almost 50 years of integration with the continent.

Customs border checks have returned for the first time in decades, and despite the free-trade deal allowing Britain continued access to Europe’s nearly 450 million consumers, queues and disruption from additional paperwork are expected.

Investors are meanwhile hopeful that the ongoing rollout of Covid-19 vaccines — with the first UK patient receiving the Oxford University/AstraZeneca’s jab — will help offset surging infections and herald a return to normality.

“Markets are being helped by the Oxford-AstraZeneca story as there is a growing feeling that the pharma sector is in a better position to tackle the health crisis,” said CMC Markets analyst David Madden.

European stocks were also propelled on Monday by merger and acquisition activity on the first trading day of the New Year.

British betting company Entain, which owns high street chain Ladbrokes, revealed it has turned down a takeover offer worth ?8.0 billion ($10.9 billion, 8.9 billion euros) from US casino giant MGM.

The news sent Entain’s share price soaring almost 30 percent to 1,462 pence, topping the FTSE 100 risers board.

“Entain Group understandably leads the way after a rejected takeover bid from MGM Resorts highlighted the potential for a new enhanced offer in the near future,” added Mahony.

In Paris, shareholders in French automaker PSA almost unanimously approved a merger with US-Italian group Fiat Chrysler, in a deal that will create the world’s fourth-largest carmaker by volume.

While most Asian markets have started the year on a positive note, Tokyo stocks have been hit by concerns a state of emergency could be called in the capital as the virus surges While most Asian markets have started the year on a positive note, Tokyo stocks have been hit by concerns a state of emergency could be called in the capital as the virus surges Photo: AFP / Kazuhiro NOGI

In early afternoon deals, PSA shares won 2.4 percent to 22.91 euros in Paris, while Fiat shares added 2.1 percent to 14.96 euros in Milan.

Elsewhere, Asian equities mostly bounded higher on the first business day of the year.

With uncertainty over Brexit and a new US stimulus gone, sights are now on the economic recovery from the calamity that was 2020.

Investors are also keeping tabs on the US, where Georgia has two runoff elections that will decide which party holds control of the Senate.

London – FTSE 100: UP 2.9 percent at 6,647.11 points

Frankfurt – DAX 30: UP 1.3 percent at 13,897.56

Paris – CAC 40: UP 1.7 percent at 5,646.18

EURO STOXX 50: UP 1.5 percent at 3,604.85

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,258.38 (close)

Hong Kong – Hang Seng: UP 0.9 percent at 27,472.81 (close)

Shanghai – Composite: UP 0.9 percent at 3,502.96 (close)

New York – Dow: UP 0.7 percent at 30,606.48 (close)

Pound/dollar: UP at $1.3680 from $1.3672 at 2200 GMT

Euro/pound: UP at 89.88 pence from 89.34 pence

Euro/dollar: UP at $1.2296 from $1.2215

Dollar/yen: DOWN at 102.73 yen from 103.20 yen

West Texas Intermediate: UP 1.0 percent at $49.01 per barrel

Brent North Sea crude: UP 1.5 percent at $52.59

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