Global equities pushed higher yesterday despite continued political uncertainty in Germany, while EasyJet’s share price was propelled higher on a positive outlook.
While the euro remained under pressure as German Chancellor Angela Merkel struggled to form a coalition government, Frankfurt’s DAX pushed 0.8% higher at 13,167.54.
The leader of 12 years indicated Monday she was ready to hold snap elections after the collapse of talks at the weekend shoved Europe’s biggest economy towards political turmoil.
“Merkel said she did not favour a minority government because it wouldn’t bring the stability necessary to govern effectively,” said Greg McKenna, chief market strategist at AxiTrader.
“That suggests more talks but an increased chance of fresh elections in early 2018. How that plays out is going to be interesting for the euro and certainly the Brexit process as well.”
Financial analyst Connor Campbell at Spreadex said “it seems investors have faith that Germany will find a way to move past its current uncertainty without the kind of performance-damaging aftermath seen by some of its peers” such as Spain and the UK.
Shares in carmakers helped drive the DAX higher, with Volkswagen accelerating 3% after the company was more optimistic about earnings thanks to an offensive on SUVs.
BMW rose 1.9% and Daimler gained 1.6%.
In Paris, the CAC 40 ended the day 0.5% higher at 5,366.15, while the FTSE 100 in London added 0.3% to 7,411.34 points.
EasyJet’s share price shot up 5.1% despite annual net profit dropping by almost one third at the British no-frills airline on strong competition and a Brexit-fuelled slump in the pound.
However, investors were pleased with “signs of a break in the clouds ahead”, noted George Salmon, equity analyst at stockbroker Hargreaves Lansdown.
“Forward reservations are up on last year, and the trend for rising costs and lower prices is set to reverse in the coming months.”
Across the Atlantic, while concerns about the prospects for US tax reform continue to nag, optimism about the global economy provided some buoyancy to Wall Street.
The Dow was up 0.7% in late morning trading.
However, with the Thanksgiving holiday shortening the US trading week analysts do not expect New York to provide many strong leads to the market in the next few days.
An EasyJet flight at Gibraltar airport. The airline’s share price shot up 5.1% yesterday despite annual net profit dropping by almost one third.
