European Stocks Edge Higher After Region’s Worst Day of the Year
(Bloomberg) -- European stocks saw small gains following their worst day in seven months as investors considered whether the spread of Covid-19 mutations could derail a rebound in economic growth and corporate earnings.
The Stoxx Europe 600 Index was up 0.4% at 3 p.m. in London after rising as much as 1.1% earlier. Construction, financials and chemicals outperformed, while bookmakers, energy and consumer staples trailed. The U.K. FTSE 100 added 0.3% after being among the worst-hit benchmarks on Monday.
“The delta variant has brought into question the sustainability and durability of the recovery,” said Candice Bangsund, vice president and portfolio manager at Fiera Capital. “The mood in the market has deteriorated.”
The Stoxx 600 benchmark lost 2.3% on Monday, the most since December, as rising coronavirus infections spurred fresh worries about business disruption. However, despite concerns over elevated equity valuations, investors see few alternatives to stocks as bond yields remain depressed.
Longer-term, however, investors remain broadly positive on equities. “The stock market should continue to advance in the coming years, primarily driven by earnings growth,” Madison Faller, global strategist at JPMorgan Private Bank, said by phone.
“Even if case counts do get substantially worse before they get better, hospital utilization rates remain far lower than where they were at the peak of the Covid crisis,” said Faller, which “matters a lot for the reopening.”
Earnings are also a big focus for investors as companies ramp up reporting this week. Market participants will be watching profit and outlook updates to gauge the strength of the recovery and corporate optimism.
Among individual stocks moving on Tuesday, UBS Group AG rose 3.9% after posting better-than-expected second-quarter profit, while cautioning that client activity is set to slow.
Electrolux AB slumped 6.7% after the white-goods maker’s quarterly profit missed estimates and the company warned of supply challenges. Truckmaker Volvo Group fell 3.1% on disappointing earnings following production issues stemming from a lack of semiconductors and other parts.
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