Fundamental Comment

European shares inch up amid mixed sentiment

European shares inch up amid mixed sentiment

European shares were little changed with more upside tendency amid mixed sentiment after three Federal Reserve officials hinted to a potential stimulus tapering and as investors await earnings results. 

Euro STOXX 600 rose 0.16% to 409.08 points after a mixed performance in Asia and a retreat on Wall Street overnight. 

Fed Presidents Richmond's Tom Barkin, Atlanta's Raphael Bostic and Dallas' Robert Kaplan all referred that the U.S. economy could strong recover this year on higher fiscal stimulus and mass vaccination.

“I’m open to that” potential late-2021 tapering, Fed Atlanta Bank President Raphael Bostic said, highlighting that “a lot of it will depend on how the virus and the vaccine distribution goes.”

On the fiscal side, markets are getting prepared for trillions of dollars in relief spending directly after Joe Biden’s inauguration on January 20. However, some analysts argue that a 50-50 split in the U.S. Senate could be a hurdle against Democrats’ spending plans.

This week, the earnings season will start in the United States as companies will start announcing their third-quarter results, amid some current profit-taking behavior by some investors after the recent rally in equities to record highs. 

On the downside, political uncertainty increased in the U.S. as Democrats call for Trump’s impeachment after the Capitol riots, with just few days left for him in office. 

Also, there are worries as the number of Covid-19 cases exceeded 90 million worldwide, and as the vaccine rollout is still slow to counter the fast spread of the virus.

The dollar index retreated slightly today after hitting a three-week top on Monday, amid light economic calendar, ahead of U.S. consumer prices and retail sales data due this week. 

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