FRANKFURT, July 8 ― European stocks rose yesterday as commodity-linked stocks recovered from sharp falls in the previous session, while lower bond yields kept supporting highly valued technology shares.
The pan-European STOXX 600 rose 0.8 per cent, a day after the index snapped a three-day winning streak as worries about the global economy led to a bond market rally that pushed US and euro zone bond yields lower.
Yields slid again yesterday, lifting technology stocks by 1 per cent, but pushing bank stocks down 0.2 per cent.
Barclays in a note said they were adding tech exposure via software “given their later-cycle investment nature. Valuations are not cheap, but we expect earnings to be supportive.”
Europe's most valuable tech company SAP was the biggest boost to the STOXX 600, up 3.5 per cent. Traders also pointed to a double upgrade to “buy” from Bank of America. Germany's DAX posted its best session in seven weeks, up 1.2 per cent.
As copper and iron ore prices rose, mining stocks made back 2.3 per cent from Tuesday's 2.5 per cent drop.
Investors were cautious, putting defensive sectors among the top gainers.
Sliding crude prices weighed on oil & gas companies. The travel and leisure sector lost the most, down 1.5 per cent with the World Health Organisation advising against pre-mature lifting of Covid-19 restrictions.
A rally in beaten-down “value” stocks has helped push the STOXX 600 to record highs this year, but worries about the Delta variant of Covid-19 slowing economic recovery have put them behind “growth” stocks year-to-date.
“Flows are coming back, but the region is still not crowded and we think improving (economic) growth could last beyond reopening catch-up,” Barcalys said, adding Germany and Italy are their top picks in the continent.
Investors are awaiting the US Federal Reserve's policy minutes later in the day, which could shed light on when it plans to start tapering asset purchases.
Among other notable moves, French state-controlled power group EDF added 2 per cent after raising its 2021 core earnings target, given its new estimate for nuclear output in France.
With earnings season set to kick off later in July, analysts are expecting profits at STOXX 600 companies to jump 108.6 per cent in the second-quarter versus a year ago, as per Refinitiv IBES data.
Swiss duty-free retailer Dufry fell after Italy's Autogrill denied rumours of a potential tie-up between the companies. Both slipped more than 1.5 per cent.
Dufry was up 1.3 per cent after gaining as much as 5 per cent earlier, while Autogrill shares were up 1.5 per cent. ― Reuters
Source: Malay Mail
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