Europe close: Stocks end higher amid bounce on Wall Street and after China rate cuts
By Alexander Bueso
Date: Thursday 20 Jan 2022
(Sharecast News) - European stocks finished higher on Thursday lifted by a bounce on Wall Street even as investors fretted about inflationary pressures.
Also helping investor sentiment, according to some analysts in the City, overnight the People's Bank of China cut its one and five-year prime lending rates.
The Chinese one-year loan prime rate was cut by 10 basis points, while the five-year LPR, which influences the pricing of home mortgages, was cut by 5 basis points, the first time since April 2020.
The pan-European Stoxx 600 was up 0.51% to 483.35, alongside a 0.65% gain for Germany's Dax to 15,912.33 and a 0.73% jump on the FTSE Mibtel to 27,570.0.
Nevertheless, in the background, inflation worries continued to nag investors who were eyeing the potential path and pace of US rate hikes as the Federal Reserve prepared to tightened its pandemic-enforced loose monetary policy.
"Bond yields have been increasing recently as traders are starting to factor-in the possibility of higher interest rates in the months ahead, and typically the spikes in yields have sparked moves lower in stocks," said David Madden at Equiti Capital.
In equity news, shares in Swiss online pharmacy Zur Rose gained after a strong earnings report.
French industrial company Soitec plunged more than 18% to the bottom of the index after announcing that senior Atos executive Pierre Barnabe will succeed outgoing CEO Paul Boudre.
Deliveroo shares were up after the fast-food delivery platform said the gross value of orders on its platform rose 36% year-on-year in the fourth quarter, resulting in its hitting the top of guidance with a 70% rise for the year.
Primark owner Associated British Foods lost ground after it said fourth quarter sales at its Primark stores had been hit by the surge in Covid Omicron cases, but were now showing signs of recovery as it maintained full-year guidance.
Shell and BP fell as oil prices dropped, while consumer goods giant Unilever gained after it said late on Wednesday that it would not be lifting its £50bn offer for GlaxoSmithKline's consumer healthcare business. Glaxo was on the back foot too.
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