European Stocks Soar Ahead of ECB, BOE Meetings; BooHoo Cuts Guidance

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By Peter Nurse 

Investing.com - European stock markets traded sharply higher Thursday,  with investors reacting positively to the Federal Reserve’s move to tackle inflation ahead of policy decisions by both the European Central Bank and the Bank of England.. 

At 3:45 AM ET (0845 GMT), the DAX in Germany traded 1.8% higher, the CAC 40 in France rose 1.5% and the U.K.’s FTSE 100 climbed 1.1%. 

These gains follow the U.S. central bank announcing late Wednesday that it will speed up the tapering of its asset-buying program, while projecting three quarter-point interest-rate increases in 2022. 

This suggested the Fed policymakers considered the U.S. economy strong enough to handle the Omicron variant of Covid-19 as well as monetary policy tightening as they moved to tackle high levels of inflation.

There’s more central bank activity in Europe Thursday, with both the European Central Bank and the Bank of England having to strike a balance between the need to support economies threatened by the Covid-19 virus with the desire to combat inflationary pressures.

In corporate news, Boohoo (LON:BOOH) stock slumped over 15%, falling to a 5-year low, after the British online fashion retailer cut its guidance for 2021-22 year, citing disruption to international deliveries and pandemic-related cost inflation.

EDF (PA:EDF) stock fell almost 9% after the French power company announced it had shut down a second nuclear plant due to safety issues. These closures represent around 10% of its reactor capacity, just as Europe is crying out for more energy, and may take over 200 million euros off its expected EBITDA this year.

Telecom Italia (MI:TLIT) stock fell 0.6% after the Italian phone group issued its third profit warning in a year, while it faces a takeover approach from U.S. fund KKR.

On the flip side, Valneva (PA:VLS) stock rose over 10% after the French biotech firm issued positive clinical trial results on its Covid-19 vaccine candidate, while Novartis (SIX:NOVN) stock rose 3% after the Swiss drugs giant announced a new share buyback worth up to $15 billion to be executed by the end of 2023.

Airbus (PA:AIR) stock rose 3.1% after Qantas Airways chose the European planemaker as the preferred supplier to replace its domestic fleet, switching from Boeing (NYSE:BA).

Volkswagen (DE:VOWG_p) stock rose 1.4% despite Manager Magazin reporting that its sales are expected to fall below 9 million vehicles this year as semiconductor bottlenecks weigh on production. The German auto giant had unit sales of just under 11 million in 2019.

Economic data in focus Thursday will center around flash December purchasing manager’s index numbers across the Eurozone and U.K., with the releases set to reflect the imposition of Covid restrictions and partial lockdowns in many regions.

Oil prices rose Thursday after U.S. crude stockpiles fell the most since September, suggesting demand remained strong in the world's largest consumer even as the Omicron variant of the Covid-19 virus threatens to curb global consumption. 

U.S. crude inventories shrunk by 4.58 million barrels last week, according to a report from the Energy Information Administration released late Wednesday. This was a much larger drop than an industry report from the American Petroleum Institute had indicated on Tuesday.

By 3:45 AM ET, U.S. crude futures traded 1% higher at $71.59 a barrel, while the Brent contract rose 1% to $74.61. 

Additionally, gold futures rose 1.3% to $1,787.35/oz, while EUR/USD traded 0.3% higher at 1.1313.