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06 Apr 2021 | 08:14

Europe open: Shares hit record highs on recovery optimism

(Sharecast News) - European shares hit record highs at the opening on Tuesday, after a surge on Wall Street overnight driven by optimism over a global economic recovery from the Covid-19 crisis and US stimulus spending. The pan-European Stoxx 600 index was 0.6% higher at 434 points on resumption from the Easter break, passing the previous record of 433.90 points set in February 2020. It has gained more than 40% year on year.

The German DAX rose 0.94%, France's CAC 40 was up 0.53% and UK's FTSE 100 jumped 1.09%.

US markets closed at record highs overnight as data indicated a strong labour market recovery and services sector activity.

"The recovery trade is at full throttle," said Richard Hunter, head of markets at interactive investor.

"Monday was the first chance for markets to react to the bumper non-farm payrolls figure from Friday, where a hugely better than expected 916000 jobs were added, while the unemployment rate also declined to 6%."

"Coupled with a strong services activity report which also jumped to a record high, and with the vaccination rollout also advancing strongly, gains across the board reflected the renewed optimism."

Hunter said inflationary concerns, and worries over an early spike in interest rates, have subsided for the moment, with Treasury yields holding steady.

"In turn, today is the first chance for European markets to react to this fresh wave of optimism after an extended weekend, and indeed to the possibility that global economies will be lifted by a recovery which is expected to be led by the US in the first instance," he added.

UK shares were higher as the government confirmed a further easing of lockdown restrictions with pubs and non-essential shops being given the green light to reopen from April 12.

In equity news, shares in Credit Suisse fell almost 1% as the bank warned of a SFR 4.4bn hit from the Archegos Capital affair when the US hedge fund was forced to liquidate billions of dollars worth of positions after being hit by margin calls just over a week ago.

Compounded by the Greensill Capital scandal, involving the collapse of the supply-chain financier with links to ex-UK prime minister David Cameron, Credit Suisse says is now facing a SFR 900m loss in the first quarter. It also announced at least two senior executives would be gone by May.
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