European stock markets rose for the third day in a row, as investors got rid of concerns about the mutation of the Delta coronavirus and turned to betting on the ECB to provide further monetary support.
After rising 1.7% on Wednesday, the Stoxx 600 index opened up 0.6%. Despite the volatility in the global market on Monday, the regional stock index is expected to close slightly higher this week and is still close to historical highs. The London FTSE 100 Index was flat.
investor Generally expected tThe European Central Bank said at a meeting later on Thursday that after its 185 million euros pandemic emergency purchase plan (PEPP) ends next year, it will continue to purchase government bonds, which eased borrowing costs throughout the coronavirus crisis.
Such bond purchase programs increase government debt prices, lower borrowing costs, and can increase stock valuations by encouraging investors to accept lower yields or dividend yields relative to stock prices.
Martin Currie Global Portfolio Trust Manager Zehrid Osmani said: “The surge in the pandemic has caused the market to worry about the vulnerability of economic recovery.” But the new lockdown or other social restrictions have caused “the central bank to maintain Very accommodative,” he said, “this will naturally make you turn to the stock market that supports bonds.”
The yield on the 10-year German government bond is inversely proportional to the price of the benchmark Eurozone fixed-income securities, stabilizing at minus 0.4% on Thursday, close to the lowest level since early February. The 10-year U.S. Treasury bond yield fell 0.02 percentage points to 1.275%.
Paul Jackson, Global Head of Asset Allocation Research at Invesco, said: “Recent Covid data shows that even in countries that have vaccinated most of the population, such as the United Kingdom, there is another wave of infections.”
“In this context, we don’t expect the European Central Bank to send any signal to tighten policy at the upcoming meeting,” he said. “It would not be surprising to see some form of implicit relaxation.”
The euro has stabilized at $1.1796 against the U.S. dollar, and the exchange rate against the U.S. dollar has fallen 0.6% so far this month.
In Asia, Hong Kong’s Hang Seng Index rose 1.7% and South Korea’s Kospi 200 Index rose 1.3%. Strong meeting Wall Street was driven by strong quarterly earnings from Coca-Cola, advertising group Interpublic, and telecom group Verizon.
The futures market hinted that the S&P 500 index would rise 0.1% in early New York trading, while the technology-focused Nasdaq Composite Index would rise 0.2%.
The international oil benchmark Brent crude fell 0.2% to US$72.05 per barrel.