European markets rise as COVID wave knocks German consumer confidence
European stock markets advanced on Thursday despite a surge in coronavirus infections, and soaring inflation, hitting households in Germany.
The gains came despite the GfK barometer showing consumer confidence in Germany tumbled to -1.6 for December, down 2.6 points from the previous month, amid a recent surge in COVID and fears of another lockdown.
Meanwhile, estimates for economic growth in Europe’s largest economy in the third quarter were revised down from 1.8% to 1.7%.
GfK consumer expert Rolf Buerkl said: “Consumer sentiment is currently being squeezed from two sides. On the one hand, the number of cases in the fourth wave of the coronavirus pandemic is exploding, which threatens to overwhelm the health system and could lead to further restrictions.
Watch: Germany mulls a lockdown as COVID cases rise in Europe
“On the other hand, the purchasing power of consumers is dwindling due to a high inflation rate of 4%. The outlook for the upcoming Christmas season is now somewhat bleak.”
Official figures released on Thursday show Germany has become the latest country to surpass 100,000 deaths from coronavirus since the pandemic began.
Across the pond, US markets are closed for the Thanksgiving holiday. The S&P 500 and Nasdaq ended Wednesday with healthy gains but the Dow edged slightly lower.
It came as data revealed that the US economy grew at an annualised rate of 2.1% in the third quarter of the year, slightly higher than the 2% pace estimated a month ago, with consumer spending up 1.7%.
This comes after 6.7% growth in the previous quarter, due to a slowdown in consumer spending, the US Commerce Department’s Bureau of Economic Analysis revealed.
Read more: UK manufacturing orders strong despite supply chain issues
Meanwhile, initial jobless claims fell by 71,000 to 199,000 in the week to 20 November, the US Labour Department said separately on Wednesday. This was better than the 260,000 expected by economists and the lowest level since November, 1969 when it was 197,000.
Equity markets mostly rose in Asia on Thursday as a batch of strong economic data spurred expectations that the Federal Reserve will withdraw its vast financial support and lift interest rates earlier than thought.
In Japan, the Nikkei (^N225) climbed 0.7% while the Hang Seng (^HSI) rose 0.2% in Hong Kong and the Shanghai Composite (000001.SS) dipped 0.2%.
Tensions between the US and China are continuing to escalate after Beijing said it would take all measures necessary to protect its companies, threatening to retaliate over the latest wave of US sanctions.
The US government added 12 firms to its trade blacklist on Wednesday over national security and foreign policy concerns.