European Markets Close Higher After Cautious Session

European stocks turned in a mixed performance on Monday amid concerns about a third wave of coronavirus infections, the turmoil in Turkey following a rate hike and the sacking of the country’s central bank chief, and a weak outlook for the German economy.

Most of the major markets closed higher although buying interest was somewhat subdued.

The Turkish lira slumped toward a record low versus the dollar after President Recep Tayyip Erdogan ousted central bank chief Naci Agbal for hiking interest rate to contain double-digit inflation.

The move came two days after the Central Bank of the Republic of Turkey hiked its benchmark policy rate by 200 basis points to 19% to tame its high inflation rate. In a statement on Sunday, the central bank said it “will continue to use the monetary policy tools effectively in line with its main objective of achieving a permanent fall in inflation”.

Bundesbank said in its monthly report that the German economy is likely to shrink sharply in the first quarter of 2021. The bank cautioned that service sector activity is set to drop sharply again due to the Covid-19 containment measures. Experts assumed that in addition to Covid-19 related measures, the higher VAT rates since the beginning of the year also played a role.

The U.K. and Germany are reportedly looking to extend lockdown measures in some places to curb the spread of the coronavirus infections.

On the positive side, AstraZeneca’s coronavirus vaccine was found 79% effective in a US trial at preventing symptomatic illness.

The pan European Stoxx 600 climbed 0.2%. The U.K.’s FTSE 100 moved up 0.3%, Germany’s DAX gained 0.24%, and France’s CAC 40 ended down 0.47%. Switzerland’s SMI ended higher by 0.63%.

Among other markets in Europe, Belgium, Czech Republic, Denmark, Finland, Netherlands, Norway, Russia and Sweden ended higher.

Turkey fell sharply, with its benchmark BIST 100 falling about 10%. Austria, Greece, Iceland, Ireland, Portugal and Spain also closed weak. Poland and Ukraine ended flat.

In the UK market, AstraZeneca shares climbed 3.3% thanks to positive feedback about the company’s vaccine. “The AstraZeneca US Phase III trial of AZD1222 demonstrated statistically significant vaccine efficacy of 79% at preventing symptomatic COVID-19 and 100% efficacy at preventing severe disease and hospitalisation,” the UK-based pharmaceutical and biotechnology giant said in a statement.

Scottish Mortgage gained 4.5%. Kingfisher gained more than 3.5% after reporting a 44% jump in annual profit. RightMove, DCC, Reckitt Benckiser, Standard Life, Bunzl, Spirax-Sarco Engineering and Smurfit Kappa Group gained 1.8 to 3.4%.

IAG, Rolls-Royce Holdings, British Land, Melrose Industries, Legal & General, Fresenillo, Rio Tinto and HSBC Holdings declined sharply.

In the French market, STMicroElectronics, Dassault Systemes and Schneider Electric moved up sharply, while Technip, Kering, Sodexo, Air France-KLM, Valeo and Unibail Rodamco declined 2 to 3%.

Veolia ended more than 2% down. The company, which vows to pursue its hostile takeover of utility rival Suez SA, said Sunday that it will not sell or exchange its 29.9% stake in the capital of Suez.

In Germany, Volkswagen rallied nearly 7%. Infineon Technologies moved up nearly 5% and BMW gained more than 2.5%, while Henkel and Deutsche Post moved up by about 1.5%.

Lufthansa, MTU Aero Engines, Continental and Siemens ended notably lower.

Data from the European Central Bank showed the euro area current account surplus declined in January. The current account logged a surplus of EUR 30 billion in January, down from EUR 37 billion in the previous month.

The surplus on trade in goods rose to EUR 39 billion from EUR 38 billion in December. Likewise, the surplus on services increased to EUR 12 billion from EUR 11 billion, the data showed.