Oil, mining stocks help protect European stocks from fall

European shares rebounded on Wednesday after four days of losses, as higher commodity prices helped allay fears about Europe’s worsening COVID-19 situation and the prospect of severe sanctions.

The pan-European STOXX 600 index climbed 0.4pc after recording its worst session in nearly two months on Tuesday amid fears of a resurgence in coronavirus cases and rising interest rates.

Oil stocks rose 1.2 percent, their biggest jump in over a month, as crude oil prices edged higher, as investors were skeptical about the effectiveness of a US-led release of oil from strategic reserves.

Miners tracking higher copper prices rose 0.8 per cent on concerns over Chinese demand, while travel stocks fell more than 1 per cent on prospects of tougher travel restrictions.

European stocks are on course for weekly losses, as the withdrawal of Covid-19 restrictions, rate hikes and inflation concerns fueled fears of a weak economic growth outlook.

Nick Nelson, head of European equity strategy at UBS, said: “There is a two-way pull between macro concerns and what’s happening to the bottom-up in terms of corporate profits, while the third quarter has been one of the best reporting seasons of the decade. ” For Europe, a rise in US bond yields and macro concerns such as Covid-19 cases have held back stocks.

“People are waiting to see what impact the COVID measures will have on economic growth in Q4 and next year. If the situation worsens and we see a more aggressive response from governments, there will be concerns on the overall European economic growth profile. “

The latest Refinitiv data shows that profits of companies listed on the STOXX 600 are expected to rise 58.8pc to €102.7bn from a year ago – another drop from last week’s 60.4pc estimate, and 60.7bn from the week before that. pc.

Meanwhile, an Ifo Institue survey showed German business morale deteriorated for the fifth month running in November, as supply bottlenecks in manufacturing and a spike in coronavirus infections blew growth outlook.

Telecom Italia jumped 8.3 pc after reports that KKR was looking to increase its offer for the company after its top investor Vivendi said the initial was too low.

French catering company Allier Group rose 1.8 percent after announcing new targets for its next fiscal year and posting its best quarter since the pandemic began.

German medical device maker Draegerwerk reported a drop of 10.9 pc after expecting a drop in sales and earnings next year, citing weak demand for products related to the pandemic.

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