European Stocks, Monetary Policy, and Economic Recovery
European stocks reached new highs on Monday, as optimism about the reopening of economies
as well as easy monetary policy supported sectors that usually benefit from a recovery. The pan-
European STOXX 600 gained 0.1% to reach its best result, with miners rallying 2.6% to a 10-
year-high thanks to strong commodity prices.
U.K.-listed miners such as Rio Tinto, BHP Group as well as Glencore jumped almost 3%.
China’s benchmark iron ore futures added 10% to a record high, steel prices rose 6%. Copper
prices climbed to record highs on hopes of improved demand amid tightening supply.
The boom in commodity prices is great news for the minerals or the cyclical sectors. It cements
the idea that people got further towards value and commodity prices. Nonetheless, on the other
hand, people should be aware of the risk that the boom exacerbates worries regarding inflation.
U.K’s commodity-heavy FTSE 100 added 0.2% despite a surge in the pound. British Prime
Minister Boris Johnson is expected to announce the next phase of reopening from the COVID-19
lockdown.
British Airways-owner AIG, easyJet, and Wizz Air, nonetheless, fell between 2% and 3% after
the country decided to allow international flights to resume from May 17. At the moment, there
are 12 countries that form the so-called “green list”.
The wider travel and leisure sector dropped 1.3%, with highly valued technology stocks
declining 1.0%.
Stocks, investors, and various factors
Investors will be focusing on U.S. inflation data later this week to learn more about the situation.
They want to check if a strong rise in price will drive the Federal Reserve to alter its policy
stance. A weaker than expected U.S. employment data, boosted hopes that interest rates will
remain lower for longer.
Another important factor is the earnings season. It entered the home stretch, with about two-
thirds of STOXX 600 companies having reported results. The vast majority of the companies
surpassed profit estimates.
German biotech company BioNTech jumped 9.6% after revealing its plans. The company wants
to build a new manufacturing site for its vaccines based on mRNA in Singapore.
French lender Societe Generale added 2.3% on plans to pare back risk exposure in its global
markets business. It also plans to focus more on financing and advising on deals.
British company Greggs added 9% as it raised its profit outlook. The company modified its profit
outlook following a strong recovery in sales after the easing of COVID-19 restrictions.
