European markets rise as Biden transition begins

Watch: European markets rise as Biden transition begins

European markets rose throughout Tuesday as a prominent US independent agency formally accepted president-elect Joe Biden as the country’s next leader, which added to enthusiasm over a COVID-19 vaccine and hopes of global economic recovery.

On Monday, the US General Services Administration chief Emily Murphy wrote in a letter to Biden that he can formally begin the hand-over process.

Markets remained in positive territory until market close. The FTSE 100 (^FTSE) gained 1.6% in London. In Paris, the CAC 40 (^FCHI) was up 1.2%. Germany’s DAX (^GDAXI) was also higher 1.3% as the country’s economy recovered at a record pace in the third quarter, according to the latest revised figures from the Federal Statistics Office.

“The usual suspects appear to be leading the gainers on the back of the more optimistic outlook with IAG (IAG.L) and Rolls Royce (RR.L) continuing their almost symbiotic moves up and down as vaccine news ebbs and flows, amidst talk that some quarantine rules could get eased to six days from December 15th if passengers pay for a coronavirus test that comes back negative,” said Michael Hewson, chief market analyst at CMC Markets.

“This has been welcomed by the travel sector as being long overdue, sending the likes of Air France (AFR.F), Lufthansa (LHA.DE) and EasyJet (EZJ.L) higher as well.”

US markets were also higher in early trading. The S&P (^GSPC) was up 1.5%. The Dow Jones gained 1.7% (^DJI). Nasdaq futures (^IXIC) headed higher 1.1%.

President Donald Trump has advised his team to “do what needs to be done with regard to initial protocols,” a sign that he is accepting the election outcome which could spell an end to his legal challenges of the results.

Markets also welcomed reports that Biden intends to nominate former Federal Reserve chair, Janet Yellen, to become the next US treasury secretary.

Meanwhile, ahead of the year-end Brexit transition deadline, UK prime minister Boris Johnson is reportedly preparing to make a significant intervention in trade talks this week as it’s claimed both sides believe a deal is within reach.

On Monday Johnson confirmed England’s lockdown will be lifted as planned on 2 December, and the country will return to a three-tier regional system with the strictest lockdowns only in virus hotspots.

READ MORE: Boris Johnson: Shops and gyms to reopen in England but pubs face strict rules

Risk appetite overnight in US markets was boosted by progress on COVID-19 vaccines. AstraZeneca (AZN) said its COVID-19 vaccine could be as much as 90% effective, be cheaper to make, easier to distribute and faster to scale-up than its rivals.

Asian markets were mixed at market close. The Shanghai Composite (000001.SS) fell 0.3% and the Shenzhen Component (399001.SZ) dropped 0.4%. Elsewhere, the Hong Kong Hang Seng (^HSI) was up 0.4%, South Korea’s KOSPI (^KS11) gained 0.6%.

For the day ahead, we will get get the US Conference Board’s consumer confidence indicator for November, the Richmond Fed’s manufacturing index and the FHFA’s house price index for September.

We will also hear from European Central Bank (ECB) president Christine Lagarde, the ECB’s member of the executive board Philip R Lane, Saint Louise Fed president James Bullard, Fed Reserve president and chief executive John C Williams and the BoE’s Monetary Policy Committee member Jonathan Haskel.

Watch: What will a Joe Biden presidency mean for the global economy?