Markets

European stocks inch higher as investor focus shifts to earnings

Bank of Canada becomes first major central bank to pare back asset purchases

Thu Apr 22 2021 - 09:18

European stocks followed Asian peers higher as investors focused on the outlook for earnings amid an economic revival. Treasury yields drifted lower. The Stoxx Europe 600 Index added 0.5 per cent at the open, with food and beverage companies pacing gains after Nestle sales grew more than twice the rate analysts expected amid a return to dining out.

The benchmark US 10-year yield traded near a five-week low after dropping below its 50-day moving average for the first time since November.

US futures were little changed. While concerns linger that a flare-up in coronavirus cases could derail the global growth rebound, a rotation toward cyclical and small-cap stocks signals confidence in the economic upswing. Investors are also latching onto year-ahead outlooks in corporate results to gauge the speed of the recovery.

"While certainly investors have priced in a lot in terms of normalization in certain segments of the market, I still think that there is room to run," Erin Browne, Pacific Investment Management multi-asset strategies portfolio manager, said on Bloomberg TV.

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Japan led gains in Asian stocks gained on the back of Wednesday's rally in the US The pace of the global rebound will be under the lens of European Central Bank policymakers delivering their latest statement Thursday.

The Bank of Canada became the first major central bank this week to signal it will pare back asset purchases and move up its expected timeline for potential rate hikes. The euro was slightly higher against the dollar before the ECB meeting, with no changes expected to central bank's plans to accelerate asset purchases until June to rekindle growth.

Meanwhile, oil added to losses with an increase in US crude inventories compounding concerns around a choppy global demand recovery. - Bloomberg

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