European Markets Trade Higher on Upbeat Reopening Expectations

25 May 2021 · 3rd Party Analysis

European Markets Trade Higher on Upbeat Reopening Expectations


In Summary

  • European markets are positive on Tuesday amid increased optimism
  • The German DAX in the lead, higher by over 0.70%

European markets on Tuesday continue their upside journey from yesterday as investors look toward the economic reopening that is more or less expected to arrive by the summer. European markets are also lifted by the growth narrative, combined with expectations that inflation in Europe will not derail the market’s swing to higher grounds.

European equities jumped at the opening this morning by over 0.25%. The pan-continental Stoxx 600 remains above that mark, currently hovering at 0.35% to the upside, or 1.70 points, to trade around 446.70 points. The German DAX is higher by 0.70%, or over 100 points, trading near 15,550. The UK’s FTSE100 and the French CAC40 turned negative a couple of hours into Tuesday’s trading, but, presently, they trade virtually unchanged on the day, slightly in the green.

On the other side of the Atlantic, US equity markets ended Monday’s trading session with gains across the board, led by a rally in technology stocks. All three benchmarks were positive, and futures trading indicates the stock gauges are set to extend their gains during regular hours on Tuesday. A strong session on Wall Street for tech stocks yesterday pushed big tech names to the forefront of the rally. Microsoft, Facebook, and Google’s Alphabet finished higher by over 2% apiece. Tesla gained 4.4%, while Amazon, Apple, and Netflix, all advanced by over 1%.

European Stocks Higher, Bitcoin Strugles

Despite the rotation trade that saw investors retreat from tech and other growth stocks and pile into value stocks poised to benefit from a reopening, Monday’s best-performers lifted the Nasdaq by 1.41%. S&P500 and the Dow Jones Industrial Average closed higher by 0.99% and 0.54%, respectively.

US traders and investors are piling onto riskier assets, such as equities after Fed officials played down inflation risks and said they do not expect the inflation rate to spike above 2% both in 2021 and 2022. St. Louis Fed President James Bullard commented on Monday the Fed will continue its asset purchases for the foreseeable future, despite the risk of higher inflation.

Meanwhile, in cryptocurrency, Bitcoin has been pushing higher this week amid renewed positive sentiment. The price of bitcoin shot up by over 6% late on Monday after Tesla CEO Elon Musk said on Twitter he had been discussing how to improve Bitcoin’s energy-intensive mining process. “Spoke with North American Bitcoin miners. They committed to publish current & planned renewable usage & to ask miners WW to do so,” Mr. Musk published on Twitter. “Potentially promising,” he concluded.

Minutes after the encouraging comment by the Tesla CEO, bitcoin advanced more than $2,000 to reach a session high of $39,900. Later, the buying momentum subsided and the orange coin ended the day at $38,980.

Cryptocurrencies have been in a rebound mode since late Sunday when the digital asset market, as a whole, slipped by more than 50% from its peak, erasing more than $1.2tn from total market value in just

two weeks. Presently, the emerging market is valued slightly above $1.6tn, of which Bitcoin owns $714bn, or a market share of 43.7%.

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