European shares extend gains to 5-month high
Tech stocks gained following upbeat reports from Alphabet, Microsoft and Amazon.com
European shares hit a fivemonth high yesterday, underpinned by strong earnings and a sharp drop in the euro a day after the European Central Bank (ECB) took a cautious route to scaling back stimulus.
The dollar kicked higher on signs that US President Donald Trump is pushing ahead with tax cuts and could install a more hawkish head of the Federal Reserve.
Strong earnings boosted bank shares including UBS and Royal Bank of Scotland, while tech stocks gained following upbeat reports from US bellwethers Alphabet, Microsoft and Amazon.com.
Europe’s STOXX technology index rose more than 1 per cent to its highest in almost 16 years. The wider pan-European FTSEurofirst climbed 0.5 per cent and Eurozone blue chips were set for their ninth straight week of gains.
Wall Street futures were set to open higher.
The euro hit a three-month low, of $1.1616, down 0.2 per cent on the day having notched its biggest one-day drop of year yesterday following the ECB’s announcement.
On bond markets, the premium investors demand to hold Spanish government bonds over benchmark German peers held near one-month lows on Friday, as investors appeared to look beyond a parliamentary vote for Madrid to impose direct rule over Catalonia in a crisis over an independence push.
Spanish markets have experienced bouts of volatility since Catalonia voted for secession in a referendum declared illegal by Spanish courts. “For investors, it is a case of waiting to see exactly as and when an election is called [in Catalonia], whether that is the current Catalan government calling it themselves or having it imposed upon them by Madrid,” Rabobank strategist Matt Cairns said.
The yield on Spain’s 10-year government bond was a shade lower at 1.56 per cent and the gap over Germany was close to its tightest level in a month.