European stock markets are expected to open higher Thursday, as investors digest the formation of a new governing coalition in Germany as well as the region’s ongoing Covid-19 crisis.
After two months of negotiations, the Social Democrats, the Greens and the Free Democrats agreed a coalition deal on Wednesday that will result in Olaf Scholz of the Social Democrats replacing Angela Merkel as German chancellor after 16 years.
The coalition is seen promoting more public investment to speed up the shift towards a green economy, but its first priority is likely to be attempting to control the coronavirus pandemic which has returned to the continent in force.
Scholz said Wednesday that vaccinations are to be made compulsory for targeted groups, but further measures may be needed to tackle the surge in cases.
Italy announced new restrictions late Wednesday, and both the Netherlands and France are expected to reveal new measures on Friday. Austria implemented a national lockdown at the start of this week.
Turning to the economic calendar, Germany’s third-quarter gross domestic product rose 1.7% on the month, a slight disappointment from the expected 1.8% growth, while the December reading of the country’s GfK consumer sentiment showed a drop in confidence, coming in at -1.6, a drop from the previous month’s revised 1.0.
In the corporate sector, Remy Cointreau (PA:RCOP) raised its full year profit outlook after reporting a hefty jump in first-half operating profit, driven by strong demand for the drink group’s premium cognac in China, the United States and Europe.
Crude prices edged lower Thursday with investors looking towards next week’s OPEC+ meeting for a reaction to the coordinated release of oil from government reserves by a number of major consumers, led by the United States.
The Organization of the Petroleum Exporting Countries, Russia and allies, a group known as OPEC+, has been adding 400,000 barrels per day of supply to the global market since August, and meets on Dec. 2 to decide whether or not to continue in this vein.
By 2:05 AM ET, U.S. crude futures traded 0.3% lower at $78.18 a barrel, while the Brent contract fell 0.1% to $82.16.