The European markets opened on a positive note on Friday, following a week of volatile market conditions. The trading week draws to a close with opening market sentiment higher than it was during a week in which uncertain conditions rocked the market. The European market recovered after the European Central Bank (ECB) made supportive moves.
The impulse moved DAX Futures higher by 0.2%, FTSE Futures by 0.4%, and CAC 40 Futures by 0.4%. The market high was expected, however, as the ECB, after its Thursday meeting, was largely expected to keep its benchmark interest rate. The ECB was also expected to keep its plan to purchase Euro bonds of 1.85 trillion Euros by 2022 Q1.
The ECB’s response to current and projected inflation rates, the latter being pegged at 1.4 YoY for 2023, shows its dovish response to market conditions. The ECB’s response maintained that the interest rates will remain low for an even longer period until inflation hits the 2% target.
As European markets pick up pace, a significant increase is seen in the Eurozone banking index which gained 0.2%, STOXX 600 bouncing back from its worst sell this year to gain 0.6% and the Euro Share Zone gaining 0.4%.
Experts consider the news as a positive impact on general trading sentiments, despite the ravaging effects of the new Delta COVID strain which spreads much faster and is causing much concern across Europe and Asia. As the European markets rally today, a short-term upward movement is expected for affected stocks.
Delta COVID raises nerves in European Markets
Despite its positive disposition, the ECB expressed concerns about the fresh COVID wave and how it might counter the recent positives in economic situations across Europe.
Christine Lagarde, ECB President, noted that the fresh wave may jeopardize the economic efforts being made towards full post-COVID recovery.
Despite concerns, Europe’s central bank’s support gives the market the momentum to open higher on the week’s final trading day.
Auto Stocks Gains the Most in European Markets
Friday’s opening prices saw European automakers make the most gain as the market recovered from a low week. The week’s volatility had pushed prices lower but as Friday opened in a high, automakers saw their stock leap positively.
Valeo increased by 8.1% to trade at the highest price in months. The company expressed confidence in making more sales as the supply of technology chips is expected to increase. Other top gainers include Dassault Aviation, Continental AG, and Peers Faurecia which gained 7.1%, 5.6%, and 3% respectively.
Elsewhere, fears of the Delta COVID variant had pushed travel stocks to a 5-month low but Friday’s ECB report brought a 2.7% rise to travel stocks, breaking months of low sentiments.
As investors continue to weigh the outcome of the Delta strain, European markets are expected to hold the momentum and drive stocks higher.
There will be much focus on the tech sector, as a few companies show promise going into Friday. Thales, the largest defense electronic company in Europe, posted a sharp increase in H1 revenues (9.8%) while Vodafone showed strong upward sentiments.