European stocks on track for best week since November

European equities moved modestly higher on Friday, putting them on track for a fifth consecutive daily gain and their best week since November’s vaccine-linked rally.

In Europe, the continent-wide Stoxx 600 index rose 0.3 per cent in early morning trading. Germany’s Xetra Dax was broadly flat, as was London’s FTSE 100 benchmark.

Some analysts attributed confidence to the corporate earnings season. As coronavirus lockdowns drag on in the region, results have provided a welcome surprise said Hani Redha, portfolio manager at PineBridge Investments. 

“What we’re seeing now is the market regaining confidence on the prospect of a reopening, we’re also seeing some pretty good results on earnings,” said Redha.

Oil prices rose 1 per cent to above $59 a barrel for Brent crude. That took the international marker to its highest level since last February, just before a plunge sparked by the coronavirus crisis.

The pound continued to rally on Friday, following the Monetary Policy Committee’s unanimous vote on Thursday to keep its policy rate at 0.1 per cent and maintain the size of its bond-buying programme. But it was the guidance on negative rates — the BoE is mapping out the practicalities of a sub-zero move, but was clear that there was no immediate plan to take the step — that allowed sterling to restart its move higher.

Sterling rose 0.2 per cent to $1.37 in morning trading, and also crept higher against the euro.

“There was some talk of asking banks to be ready for negative rates, that unsettled markets initially, but there was a subsequent clarification that this was more procedural and not an indication that the Bank of England intends to cut rates,” said Redha.

The prospect of a large US stimulus package continues to feed optimism on both sides of the pond, with lawmakers on Capitol Hill thrashing out the details of another major spending injection for the world’s biggest economy.

Futures markets indicated that Wall Street would open higher, with the blue-chip S&P 500 set to gain 0.2 per cent.

In Asia, China’s CSI 300 index rose 0.2 per cent, Hong Kong’s Hang Seng added 0.6 per cent and South Korea’s Kospi 200 jumped 1.2 per cent.