By Steve Goldstein, Market Watch–
European stocks rose on Thursday, the first day of the final quarter, helped by hopes that U.S. lawmakers will reach a deal to provide new stimulus.
The Stoxx Europe 600 SXXP, 0.47% climbed 0.3%, and apart from the German DAX DAX, 0.08%, other indexes rose, with the French CAC 40 PX1, 0.61% and U.K. FTSE 100 UKX, 0.88% advancing.
Futures on the Dow Jones Industrial Average YM00, 0.79% rose 196 points.
The Stoxx Europe 600 rose 0.2% in the third quarter, underperforming the 8.5% advance for the S&P 500 SPX, +0.82% over the same time frame, as the euro EURUSD, 0.19% advanced 4.3% against the dollar.
The backdrop of elevated coronavirus cases continues in Europe. New rules in Spain mean that a majority of the country’s regions will limit public service and retail to 50% capacity, while France may introduce new restrictions on Thursday night. Per person, Spain, France and the Netherlands have the highest rate of new cases over the last seven days of the world’s largest countries, according to data tabulated by Deutsche Bank.
One key question in the short term is whether the U.S. will pass an additional stimulus bill. Analysts at Goldman Sachs called that prospect “unlikely” and said that if House Democrats take a vote on their $2.2 trillion package, then that would signal the end of negotiations with the White House. But investors took heart from signs of progress announced by U.S. Treasury Secretary Steven Mnuchin.
“While the two camps are still some distance apart on the price tag, with the Democrats at $2.2 trillion and the White House around $1.6 trillion, there is talk of an ‘escalator clause’ that could be the magic card that bridges this gap,” said Marios Hadjikyriacos, investment analyst at XM.
STMicroelectronics STM, 6.06% rose 6% in Milan, as the chipmaker raised its 2020 revenue outlook after stronger-than-forecast third-quarter revenue of $2.67 billion. The company reported a “sharp” acceleration in demand for automotive product and microcontrollers chips. Another chipmaker, Infineon Technologies IFX, 7.40%, also gained ground.
H&M HM.B, 7.33% shares rose 7%, as the Swedish fashion chain declared the worst was over from the pandemic. Its third-quarter earnings beat expectations, as it said sales in September fell 5% and that it plans to close 250 stores next year.
Bayer BAYN, -10.16% shares slumped 10% as the German pharmaceutical and chemicals company said next year’s core earnings per share will be slightly below this year’s at constant exchange rates, with sales flat.
Bayer said the agricultural sector is being hurt by low commodity prices for major crops, intense competition in soy, and reduced biofuel consumption, and moves in the Brazilian real are further hurting the company. It’s going to take impairment charges up to “high-single-digit” billion euros in its agricultural business.
Rolls-Royce RR, -10.00% shares fell 11%, as the struggling U.K. aircraft engine maker said it would sell £2 billion in shares priced at a 41% discount to Wednesday’s close, and raise at least £1 billion more in the bond market.
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