05.02.202116:20 Forex Analysis & Reviews: European market edges higher on investor optimism

European stock indices edged higher on Friday, as investors expressed optimism that the world had already experienced the worst stage of the pandemic. In addition, market participants hope that former European Central Bank president Mario Draghi will still be able to keep Italy's economy afloat.

European stocks rose markedly on Friday amid raised hopes for a faster global economic recovery. However, German stocks fared worse than the rest of the European market. So, the DAX was up by 0.1% but then lost 0.04% due to the data on factory orders. In December, the indicator dropped more than expected.

Stocks of other EU countries showed strong performance. France's CAC 40 climbed by 0.8%. Britain's FTSE 100 closed up by 0.1%. Italy's FTSE MIB share index jumped by 0.7% following the news that the gap between German and Italian 10-year bonds yields had fallen below 100 basis points.

The STOXX Europe 600 Index gained 0.22%, striving to mark its longest winning streak since late December. According to analysts, the European stock index may well rise by 3.5% over the week, noting the best weekly performance since November.

Notably, the second wave of the COVID-19 pandemic dealt a devastating blow to the economy of the European region. Thus, euro area GDP dropped by 0.7% in the last quarter of 2020 due to new tougher restrictions imposed by the governments of European countries. Besides, Germany's factory orders fell by 1.9% in December, which is a very sharp drop following a slightly upwardly revised 2.7% increase in November.

As for energy prices, oil posted huge gains, marking the highest rate over the past year. US WTI crude oil futures rose by 0.7% to trade at $56.67 per barrel. Apparently, oil prices are on track for a 9% weekly gain. If this happens, it will be the biggest weekly jump since October.