European stock markets rose on Monday, ahead of a slew of second quarter earnings in the US this week.
France’s CAC 40 was the best performer, up 1.4%. President Emmanuel Macron has been reshuffling his cabinet in recent days but kept his well-respected finance minister Bruno Le Maire in place. In remarks reported by Bloomberg, Le Maire promised to announce “massive” support for youth unemployment later this week and a broader recovery package by the end of August.
Share prices across the continent were boosted by hopes that US corporate earnings this week will point to a strong and swift recovery in the world’s biggest economy.
“Traders are focused on earnings season and the hope is that it will set a more positive tone for the coronavirus stock market rally,” said Naeem Aslam, chief market analyst at Avatrade.
“Wall Street’s giants, JP Morgan, Bank of America, Wells Fargo, Goldman Sachs, BNY Mellon and Citigroup, will kick start earnings season this week.”
Bank earnings will give an insight into the strength of the US economic recovery, setting the tone for wider US stock market and momentum globally.
“Large US banks are in very good health and as fear ebbs, they are likely to outperform helped by continued evidence of an economic recovery,” said Sebastian Galy, a macro strategist at Nordea.
Asian markets had rallied overnight. Japan’s Nikkei (^N225) rose 2.2%, the Hong Kong Hang Seng (^HSI) added 0.6%, the Shanghai Composite (000001.SS) rose 1.7%, and the Shenzen Component (399001.SZ) rallied 3.5%.
Positive momentum came despite the continued drumbeat of COVID-19 news.
“Coronavirus cases continued to accelerate over the weekend with the US registering average case growth of +1.95% on Saturday and Sunday combined,” Jim Reid, a senior strategist at Deutsche Bank, wrote. “This is higher than the last 5 weekends average of +1.38%.”
Oil was under pressure in early trade after multiple reports in the press that OPEC was considering easing production cuts. Brent (BZ=F) was down 0.3% to $43.11 per barrel and crude (CL=F) was down 0.3% to $40.41 per barrel.