EU Stocks Up, Boosted by Fed and U.K. Employment Data

The U.S. Federal Reserve’s promises and a better-than-expected UK employment data led European stocks higher on Tuesday. 

Besetting the markets were recent worries that growing inflationary pressures could force the Fed to start tapering its ultra-easy monetary policies.

On Monday, Dallas Federal Reserve President Robert Kaplan reiterated his view that he does not expect interest rates to rise until next year. Meanwhile, Fed Vice Chair Richard Clarida pointed to the recent disappointing jobs report. It was referred to as evidence the U.S. economy had not yet reached the threshold to warrant scaling back the Fed’s massive bond purchases.

This has reassured the markets, putting the focus firmly on Wednesday’s release of the minutes from the U.S. central bank’s April policy meeting. It  could shed more light on the policymakers’ outlook on inflation.

The DAX in Germany traded 0.6% higher at 3:30 AM ET (0830 GMT), at an all-time high. The CAC 40 in France gained 0.6%, climbing to a new 52-week high. 

The U.K. ‘s FTSE 100 and the blue-chip Euro Stoxx 50 both rose 0.7%, also to an all-time high.

Furthermore, Britain’s unemployment rate unexpectedly declined again to 4.8% between January and March. During this period the country was under a tight Covid lockdown. In April, hiring increased as the country reopened.

Germany’s Constitutional Court rejected a suit that aimed to stop the ECB’s buying of government bonds helping sentiment at the margins. The release of the flash estimate of Eurozone 1Q gross domestic product comes up next. 

It will likely show that the bloc contracted by 0.6% in Q1, and by 1.8% on an annual basis, with the region struggling with fresh lockdowns.

Stocks on the Move

Italian insurer Generali stock added 1.1%, to a 52-week high. The Italian company’s Q1 profits beat expectations, thanks to the positive contribution from the non-life and asset management businesses.

Tobacco company Imperial Brands stock was up 2.4% after the firm maintained its full-year outlook. This was despite its first-half profit and sales falling short of expectations. It was hurt by lower retailer demand for cigarettes in the U.S.

On the other hand, mobile operator Vodafone stock plunged 6.2%. This came after the company reported a 1.2% drop in full-year adjusted earnings. It came in at the bottom of its guidance and missed market expectations following a Covid-19 hit roaming revenue and handset sales. 

Warnings of higher capital spending ahead also put pressure on the stock.