European stocks mostly rose on Thursday as the Federal Reserve left monetary policy unchanged while US president Joe Biden unveiled a huge $4tn investment plan for jobs, early education and social care. Fed Chairman Jerome Powell said the recovery is uneven and far from complete. He also added that it’s still not time to discuss reducing policy accommodation, including asset purchases.
In individual stocks, Shell exceeded first-quarter profit expectations to record adjusted earnings of $3.2 billion and raised its dividend by around 4%. France’s Total reported a surge in profit to pre-pandemic levels on the back of stronger commodity prices. Airbus reported a particularly strong free cash flow of 1.53 billion.
On the data front, Eurozone April final consumer confidence arrived at -8.1, in line with the preliminary estimate. Meanwhile, the European Central Bank Vice President Luis de Guindos said that inflation could be higher than 2% at the end of the year. He also stressed that it’s better to err on side of prudence when comes to withdrawing stimulus.
Against this backdrop, the FTSE 100 in London adds 0.70% to 7,012, Italy’s FTSE MIB gains 0.09% to 24,481, France’s CAC 40 is up by 0.49% to 6,337, while the German DAX 30 gives up 0.38% to 15,234. US stock index futures were higher ahead of fresh economic data out of the United States including initial jobless claims numbers and the GDP.
In currencies, the greenback regained some composure following multi-week lows as the US 10-year yields edge higher and approach the 1.65% area. Still, the USD index remains largely on the defensive so far this month, losing ground for the fourth consecutive week, with the dovish tone from the FOMC event added the selling bias surrounding the dollar. Of note, Chairman Powell once again ruled out any modification of the central bank’s forward guidance and the bond-purchase programme in the foreseeable future.
Meanwhile, oil prices extended the ascent to the $67.70 area in recent trading, staying buoyed during the European hours as traders continue to digest a bullish report on inventories along with a dovish tone from the Federal Reserve. U.S. crude inventories edged up by just 100,000 barrels for the week ended April 23 while total oil production edged down by 100,000 barrels to 10.9 million barrels per day. Also, the market continues to derive support from the OPEC+ announcement as the alliance signaled confidence in the demand outlook despite a surge in COVID-19 cases in India.
Nathan Lambert, Head of Global FX Analytical Department