European markets pushed higher on Tuesday, as optimism over a post-Brexit trade deal, fiscal stimulus in the U.S., and progress on COVID-19 vaccinations in Europe buoyed stocks.
The pan-European Stoxx 600 SXXP, +1.00% was up more than 0.9%, while London’s FTSE 100 UKX, +2.40% surged 1.9% to a nine-month high. In Paris, the CAC 40 PX1, +0.46% ticked up 0.6%. Frankfurt’s DAX DAX, +0.35% rose 0.7% to a record high — the DAX is now up almost 5% this year.
Dow futures were up 158 points, set for a strong open after rising more than 204 points on Monday and closing at an all-time high of 30,403.
In London, financial markets opened on Tuesday for the first time since the U.K. and European Union agreed on their historic post-Brexit trade deal late in the day on Christmas Eve.
At a meeting of ambassadors in Brussels on Monday, the deal received unanimous support from the 27 member states in the bloc. In the U.K., Parliament has been recalled to debate and vote on the legislation on Wednesday, and is expected to give the deal the green light.
“As the risk dominoes continue to fall, particularly with the downside risk to Brexit sidestepped, global investors are diving in full-heartedly as central in the market narrative was always based around some form of the limited U.K.-EU trade deal,” said Stephen Innes, a strategist at Axi.
Innes added that, “while positively impacting U.K. assets, today’s rise in the FTSE 100 is also having a favorable knock-on impact on risk appetite for European equities.”
The market is also welcoming approval of an increase of direct payments to Americans — from $600 to $2000 — by the U.S. House of Representatives late on Monday. The House approved the change to the $900 billion stimulus plan after President Donald Trump signed the bill on Sunday.
The stimulus plan is now in the hands of the Republican-controlled Senate, which has been averse to increasing direct-payment checks.
Charalambos Pissouros, an analyst at JFD Group, said that the launch of the EU’s COVID-19 vaccination plan on Dec. 27 could also be a factor behind market optimism.
“The launch of a cross-border European vaccination program may have also helped market sentiment, as it raised hopes of a coronavirus-free world in a few months, which could result in a strong economic rebound,” Pissouros said.
AstraZeneca AZN, +4.36% stood out as a gainer on the buoyant FTSE 100, up more than 4.7% as an emergency-use authorization for the company’s COVID-19 vaccine could be imminent. The pharmaceutical company submitted its vaccine data to U.K. health regulators last week.
Shares in European software giant SAP SAP, +2.24% rose more than 2%, after filing initial public offering papers for its subsidiary Qualtrics on Monday that value the company at more than $10 billion.
U.K. banks were among the losers in London trading, with shares in Barclays BARC, -2.87%, HSBC HSBA, -0.74%, NatWest NWG, -3.17%, and Lloyds LLOY, -3.67% among the index’s few fallers.
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