European stocks tick higher despite fears that Covid surge could dent recovery

After lower opening, Stoxx 600 gains amidinvestor confidence in post-pandemic rally grow

Photograph: iStock

Photograph: iStock

 

European stocks wobbled in early trading on Wednesday, as investors feared a resurgence in coronavirus cases could dent an economic recovery in the continent.

But after opening lower, the pan-European Stoxx 600 index edged higher with US futures as investors signalled optimism in the post-pandemic rally after shares hit all-time highs on Wall Street. The Irish index of shares also ticked marginally upwards, gaining 0.17 per cent.

Gains in health-care firms including AstraZeneca and Roche Holding led the Stoxx Europe 600 Index. Contracts on both the S&P 500 and Nasdaq 100 signalled they may add to Tuesday’s record closing levels. Meanwhile, the dollar headed for a sixth daily drop against its major peers while Treasuries rose. The moves precede the Federal Reserve releasing minutes of a July committee meeting that may give clues about inflation targeting.

Asia stocks were mixed. Sentiment was dampened by lingering questions over the future of the US-China trade pact after President Donald Trump said he called off last weekend’s trade talks. Adding to the uncertainty, the State Department is asking colleges and universities to divest from Chinese holdings in their endowments.

Investors searching for fresh catalysts to risk assets are keeping watch on US fiscal stimulus talks while preparing for the Fed minutes. Massive stimulus injections and a surge in technology companies were key to propelling the rebound in American equities from a pandemic-induced selloff.

In a positive signal for equities, House speaker Nancy Pelosi suggested that Democrats might be willing to make more cuts to their stimulus proposal to seal a deal with Republicans and speed Covid-19 relief, then come back after the November elections with additional agenda items.

Elsewhere, crude oil eased after a report signalled surging US gasoline stockpiles before Opec and its allies meet to assess its supply agreement. – Bloomberg, Reuters