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Investing.com – European stock markets traded in a mixed fashion, with investors reacting with caution after a suite of U.S. Federal Reserve officials hinted that it could start reducing its monetary stimulus later this year.
Three regional Fed Presidents — Richmond’s Tom Barkin, Atlanta’s Raphael Bostic and Dallas’ Robert Kaplan — all hinted more or less clearly on Monday that the ‘tapering’ of bond purchases could begin toward the end of 2021. The Fed is currently pumping $120 billion a month into the economy through such asset purchases. Another barrage of Fed speeches is due Tuesday, starting with governor Lael Brainard at 8:30 AM ET (1330 GMT).
At 4:05 AM ET, the DAX in Germany traded 0.3% higher, the CAC 40 in France rose 0.1% and the U.K.’s FTSE index dropped 0.1%.
Global equity markets have posted strong gains over the last few weeks, boosted by stimulus from central banks and governments alike, and the idea that vaccinations were on their way.
This tone was helped by the prospect for additional U.S. fiscal stimulus after a Democratic sweep of Congress, with President-elect Joe Biden pledging Friday a new economic stimulus “in the trillions of dollars.”
However, investors are now starting to weigh up whether valuations are becoming too stretched, especially with a global surge in Covid-19 cases, following the emergence of new highly transmissible strains of the virus. That’s posing fresh challenges for governments that are still only in the early stages of vaccination campaigns.
Additionally, political uncertainty has increased in the U.S.: Democrats introduced a resolution into the House of Representatives to impeach U.S. President Donald Trump, accusing him of inciting insurrection following a violent attack on the Capitol by his supporters last week.
Back in Europe, BMW (DE:BMWG) stock fell 0.2% after the German car manufacturer said it saw a 8.4% drop in vehicle sales in 2020 as the outbreak of coronavirus took its toll. Volkswagen (DE:VOWG_p) stock fell 1.2% on reports of a general recall for all new Golfs. In the U.K., online retailer The Hut Group raised its guidance for the coming year and now sees revenue growing as much as 35%. THG (LON:THG) stock rose 1.7% to a new all-time high.
Oil prices edged higher Tuesday, ahead of the publication of reports concerning U.S. oil stockpiles from industry group American Petroleum Institute later, and the Energy Information Administration, the statistical arm of the U.S. Department of Energy, on Wednesday.
U.S. crude futures traded 0.9% higher at $52.71 a barrel, while the international benchmark Brent contract rose 0.8% to $56.11.
Elsewhere, gold futures rose 0.3% to $1,856.10/oz, while EUR/USD traded 0.1% higher at 1.2155.
