Europe close: Bank and oil stocks pace gains
Bank and oil stocks led the way in Europe on Wednesday with all eyes on a potential clean sweep for the Democrats in the Georgia US senate runoffs.
"Victory in the two Georgia Senate runoff votes has provided the basis for a more transformative term for Joe Biden, who will now have a majority in both houses of Congress," said IG analyst Josh Mahony.
"While short-term stimulus concerns will help boost sentiment, the Nasdaq is lagging on concerns over potential restrictions for big tech."
The pan-European Stoxx 600 index was up 1.36% to 406.41, while Britain’s FTSE 100 shrugged off the latest national lockdown and soared 3.47%.
Spain's Ibex 35 was the top gainer on the Continent, climbing 3.2% to 8,350.3.
Pacing the advance across Europe, the Stoxx 600 sector gauge for banks' shares roared ahead by 5.53% to 113.16 as longer-term US Treasury yields moved up on the news out of Georgia.
A sector sub-index for Oil&Gas also leapt higher, by 3.8% to 253.14.
In the background, OPEC's top producer surprised markets with a unilateral decision to reduce its production by 1.0m barrels a day, sending Brent oil bounding ahead 1.66% to $54.53 a barrel on the ICE.
Investors shook off Eurozone services December PMIs that showed a poor reading for Italy of 39.7, compared with the 45.3 that economists were predicting, due to the impact of the second Covid-19 wave. A reading below 50 implies a contraction.
However, the readings from France, Germany, and the UK were 49.1, 47 and 49.4 respectively, all improvements on November.
On Wall Street, tech-heavy Nasdaq was 0.5% higher but lagging the other main stockmarket indices on fears a Democrat-controlled senate could approve curbs on the influence of big tech firms under US President-elect Joe Biden.
Poor sentiment towards the sector made across the Pond, sending the Stoxx 600 Technology sector down 0.57%.
"From a short-term perspective, expectations of a sharp rise in financial stimulus once Biden takes office should lessen the economic hardship associated with the coronavirus. However, while we are likely to see a rise in direct payments, a decline in Nasdaq futures does highlight the feeling that Biden will be keen to lessen the influence of big tech going forward," said Mahony.
In other equity news, BP, Royal Dutch Shell and Total were all higher as crude prices hit their highest since February 2020 following Saudi Arabia’s pledge to cut output.
Bank stocks including Standard Chartered, HSBC, Santander, BNP Paribas, Barclays and Lloyds all rose sharply.
UK baker Greggs jumped 8% as it slowed sales decline caused by the coronavirus crisis in the fourth quarter.