Europe midday: Share retain gains but keep watch on US Fed/Treasury row
European stocks remained firmer at lunch on Friday after modest gains on Wall Street as investors kept an eye on a potential spat between the US Federal Reserve and the Treasury.
The pan-European STOXX 600 index was up by 0.28%. Italy’s FTSE MIB rose 0.6% on bank merger news, while the UK’s FTSE 100 rose after retail sales data. US futures indicated a flat opening on Wall Street with the Dow slightly lower.
Investors were concerned about a potential dispute between US Treasury Secretary Steven Mnuchin and the outgoing Trump administration over a coronavirus fiscal package.
"The end of the Trump regime appears to be as anarchic and dysfunctional as it was during its heyday. In a rare rift between the two, the US Treasury and Fed openly disagreed over the end of pandemic assistance programmes, helping to drive US futures lower after yesterday’s positive session," said Neil Wilson at Markets.com.
"Treasury Secretary Steve Mnuchin called on Fed chair Jay Powell to extend 4 lending programmes by 90 days, but demanded a scheduled end to five other lending programmes and the Fed hand back some $455bn in unused funds for use elsewhere."
"The Fed said no, explaining it 'would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy'."
In the UK Figures released earlier by the Office for National Statistics showed retail sales rose for the sixth consecutive month in October, underpinned by the online segment, while government borrowing hit its highest level on record for that month but was still lower than expected.
Public sector net borrowing was £22.3bn in October, up £10.8bn from the same month last year and marking the sixth-highest borrowing in any month since records began in 1993, as the government continued to spend amid the pandemic. However, it was lower than the consensus forecast of £37.2bn.
Separate figures from the ONS showed retail sales rose 1.2% on the month in October, down from 1.5% growth in September but ahead of expectations for no growth. On the year, sales were 5.8% higher, coming in ahead of expectations for a 4.2% increase.
In equity news, Italy's BPER Banca rose 3.1% after the top investor in the bank threw its weight behind the idea of a merger with rival Banco BPM.
Thyssenkrup shares rebounded after Thursday's sharp fall in reponse to a poor profits report and the announcement of more job cuts.
Shares in accounting software firm Sage slumped 13% even after the company lifted its dividend and reported an 8.5% rise in organic recurring revenue rose to £1.6bn, driven by growth from existing and new customers, principally in North America and Northern Europe.