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November 27, 2021

Global stocks higher as U.S. futures look up

European stocks surged Tuesday with the asset class back in favor while euro-zone ‘flash’ PMI data surprised investors, coming in better than expected which provided an unexpected boost to the euro as well as stocks, Wall Street Journal informs.

By 08:30 GMT, the Stoxx Europe 600 index was surging 1.7 pc to 228.75. London’s FTSE 100 was up 1.5 pc at 5172.07, Frankfurt’s DAX gained 2.3 pc to 5600.81 and Paris’s CAC-40 increased 2.1 pc to 3114.52. Barclays Capital reiterated its positive stance on European equities, despite cutting its year-end forecasts for the Stoxx 600 and Euro Stoxx 50 indexes. The investment bank said “all in all, we expect further recovery in European stock markets in the short term as we suspect that the overall macro and corporate earnings pictures are not as grim as recent market moves imply.”

Meanwhile, there was speculation of funds rotating out of fixed income and into equities. In addition bid speculation was also providing a leg-up, with ARM Holdings soaring 4.3 pc to 513.0 pence in London. Traders noted that after the Hewlett Packard deal to acquire Autonomy, announced last week, M&A in the sector is firmly back on the agenda.

Elsewhere, the Stoxx 600 basic resources sector was up 2.8 pc at 444.67. Mining stocks were undoubtedly helped by the rise in the gold price, with spot gold touching a new high of USD 1,912.29 a troy ounce early in the session. In addition, miners found some cheer in China’s manufacturing activity data. Basic resources stocks are closely linked to demand out of the world’s second-largest economy. The China HSBC preliminary PMI rose to a two-month high of 49.8 in August from a final reading of 49.3 in July. While the number was still below the key 50 level which separates growth in economic activity from contraction, the outcome was higher than some had feared. As a result of this, Asian shares closed mostly higher. Japan’s Nikkei Stock Average ended up 1.2 pc, Australia’s S&P/ASX 200 rose 2.2 pc, South Korea’s Kospi Composite was 3.9 pc higher, the Shanghai Composite Index ended up 1.5 pc and Hong Kong’s Hang Seng Index gained 2.0 pc.

In foreign-exchange markets, the euro pushed up after the euro-zone PMI data but the dollar / yen traded in a tight range. By 08:30 GMT, the euro was fetching USD 1.4471 against the dollar, from USD 1.4358 late Monday in New York. The dollar was at Y76.62, compared with Y76.79 earlier. In other asset classes, spot gold pared gains to trade at USD 1,882.0/oz, down USD 15.10 from its previous close. October Nymex crude oil futures were up USD 1.40 at USD 85.82 a barrel, with investors keeping a close eye on events in Libya. Lastly, September bund futures were down 0.45 at 134.73.

Output in Germany expanded at its weakest rate since the eurozone’s largest economy began to recover two years ago, the index showed. A key survey of economic sentiment brought more bad news out of Germany. The ZEW survey showed that investor expectations for the next six months are at their lowest level since December 2008, dropping to minus 37.6 points from minus 15.1 in July, below the indicator’s historical average of 25.9 points. Germany, which weathered the financial crisis much better than most other developed nations, has seen its stellar growth slow amid increased worries about the cost of bailing out weak eurozone nations.

Investors are getting more concerned about a second rescue package for Greece, as the currency union’s 17 members remain locked in discussions about a Finnish deal to get cash collateral for its loan contributions. Similar requests from other nations could eat into the promised euro109 billion in loans and delay crucial changes to the eurozone’s rescue fund.

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