European Markets Rally As Travel Stocks Rebound
European stocks rallied on Wednesday, as travel stocks rebounded and investors looked ahead to the ECB policy meeting on Thursday for directional cues.
The European Central Bank is expected to adjust its forward guidance, reflecting the new 2 percent inflation goal adopted by the central bank under the new strategy unveiled earlier this month.
The new strategy allows the ECB to retain interest rates at record lows for longer periods, while tolerating higher inflation.
ECB President Lagarde remarked last week that the PEPP program would continue until “at least” March 2022.
The pan European Stoxx 600 climbed 1.2 percent to 451.82 after rising half a percent on Tuesday.
The German DAX rose 0.7 percent, France’s CAC 40 index jumped 1.2 percent and the U.K.’s FTSE 100 was up 1.6 percent.
Travel and leisure stocks rebounded after recent string of losses on worries about the spread of the COVID-19 delta variant. Lufthansa, Air France KLM, EasyJet, TUI and IAG jumped 2-6 percent.
Nordea Bank advanced 2.6 percent as it reported a better-than-expected profit for the second quarter.
Dutch semiconductor company ASML rose over 3 percent after raising its 2021 sales outlook and announcing a new share buyback plan.
British fashion retailer Next soared 8.1 percent after raising its full-year profit forecast and announcing a special dividend.
Chilean miner Antofagasta rallied 3 percent after maintaining its full-year production guidance.
Royal Mail shares fell 2.2 percent. The postal service company said parcel deliveries slowed in the last quarter as COVID restrictions eased.
German business software group SAP fell 2.3 percent despite raising its revenue forecast.
Mercedes-Benz maker Daimler AG was down 0.7 percent after a warning that a global shortage of semiconductor chips will continue in the second half of 2021.
In economic news, the U.K. budget deficit narrowed in June as the economy started to recover, yet the borrowing was the second-highest on record for the month, the Office for National Statistics said.
The public sector net borrowing decreased GBP 5.5 billion from the last year to GBP 22.8 billion in June and was below the Office for Budget Responsibility’s forecast of GBP 25.2 billion.
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