European equities rose for a fifth consecutive day, putting them on track for their best week since November’s vaccine-linked rally.
The Stoxx Europe 600 index rose 0.2 per cent in afternoon trading, leaving the continent-wide benchmark up 3.7 per cent for the week. Frankfurt’s Xetra Dax and FTSE 100 in London both climbed 0.2 per cent.
A series of solid earnings results have helped underpin the rise in bourses this week, said Hani Redha, portfolio manager at PineBridge Investments.
In Europe, 26 per cent of the companies in the Stoxx 600 have revealed results for the last quarter of 2020, according to Bloomberg data, with those earnings up 4 per cent if the coronavirus-hit energy sector is excluded, said Redha.
On Wall Street, earnings are up 10 per cent once energy is omitted for the 51 per cent of S&P 500 companies that have so far reported results, added Redha.
“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 1.1 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 pandemic.
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 there was no immediate plan to take the step — that allowed the pound to restart its move higher.
Sterling rose 0.2 per cent against the dollar to $1.3698 in afternoon trading and 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 UK 10-year bond yield also rose 0.06 percentage points to 0.50 per cent on Friday, the highest level since the market tumult in March.
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 S&P 500 set to gain 0.4 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 1.1 per cent.