Analysis of European stock exchanges:
Hardest hit stocks try to rally Credit Suisse shines after second quarter report Volvo and Electrolux warn of chip shortage
By Sruthi Shankar
July 20 (.) – European stocks rebounded on Tuesday after their worst slide of the year in the previous session, helped by a handful of positive corporate profits and production updates from miners.
The pan-European STOXX 600 index rose 0.8% after concerns about the rapidly spreading Delta variant and slowing economic growth sent it down 2.3% on Monday.
Mining, one of the sectors most affected by the sharp drop, rose 1.7% after BHP Group and Anglo American presented optimistic production figures.
Swiss bank UBS rose 4.6% after posting a 63% increase in second-quarter net profit, helped by the boom in the wealth management business. Their counterparts Credit Suisse and Julius Baer also rose.
“Although the US economy is slowing down and we expect European growth to peak this summer, we continue to favor risk assets over a 12-month horizon,” analysts at BCA Research wrote in a note.
‘The UK is one such example: widespread vaccination is keeping hospitalization rates low in that country, despite the sharp increase in COVID-19 infections. Therefore, the market impact of the Delta variant may ultimately prove to be fleeting in developed economies. “
British airline easyJet gained 1.9% after stating that it plans to fly 60% of its pre-pandemic capacity in the July-September period.
The European Travel & Leisure Index has fallen sharply from its all-time highs in April, and travel-related stocks have been hit by rising infections across the continent and last-minute changes in travel regulations.
The US government issued the biggest warning against travel to the UK on Monday.
Among other values, Norwegian telecoms operator Telenor rose 2.6% after raising its revenue outlook for the full year.
French spirits group Remy Cointreau was down 0.2%, though its first-quarter organic sales more than doubled after bars and restaurants reopened in Europe.
Analysts expect corporate earnings from the STOX 600 to skyrocket 108.6% in the second quarter from a year ago, according to Refinitiv IBES estimates, as COVID-19 restrictions have eased in All Europe.
Sweden’s AB Volvo fell 3.8% on warning of further interruptions and production stoppages this year due to chip shortages.
Home appliance maker Electrolux slumped 9.7% after reporting lower-than-expected second-quarter operating profit and warning that global supply chain problems would worsen in the coming months.
(Information from Sruthi Shankar in Bengaluru; edited by Arun Koyyur and Uttaresh.V) Translate serenitymarkets
Let’s now look at the analysis of global markets
European stocks rebound from worst day in 2021 German bond yields hit new February lows Foreign exchange reflation trading falters Dollar nears early April highs
By Tom Arnold and Kane Wu
LONDON / HONG KONG, July 20 (.) – European stocks rebounded from their worst day of the year on Tuesday, but German bond yields fell to fresh five-month lows as a reminder that investors remain concerned about the spread of the Delta coronavirus variant, which could derail the economic recovery.
The European STOXX 600 rose 1%, driven by a series of corporate earnings and production updates from miners, while in the United States S&P 500 index futures rose 0.6%.
The positive moves came after more selling in Asia, with the MSCI indicator of Asia-Pacific equities outside of Japan falling 0.7% and Japan’s Nikkei 225 hitting a six-month low, with a decrease of almost 1%.
Deleveraging risks in China hurt real estate stocks and the broader market for the second day in a row, causing shares in heavily indebted developer China Evergrande Group to plummet. The Hang Seng Index fell 0.8%, while China’s CSI300 Index fell 0.1%.
MSCI’s broader gauge of global stocks was down 0.5%, extending its longest losing streak in nearly 18 months.
“The reality is that this price action has become self-fulfilling as short-sighted investor sentiment and their positioning are forced to reassess,” said James Athey, chief investment officer at Aberdeen Standard Investments.
“I am afraid that the sale of shares is not over yet, and if I am correct, Europe will be the worst place to be given that the index is dominated by value, and therefore very cyclical.”
The world’s riskiest assets have come under pressure recently as many countries struggle to contain the outbreak of the fast-spreading Delta virus variant, raising concerns that further closures and other restrictions could jeopardize the recovery. world economy.
Stocks on Wall Street fell as much as 2% on Monday, with the Dow posting its worst day in nine months as COVID-19 deaths spike in the United States.
In another indicator of investor risk appetite, bitcoin fell below $ 30,000 for the first time since June 22.
“Despite the launch of the vaccine, markets do not appear to be learning to live with COVID-19,” ANZ analysts wrote in a note to clients.
“Sentiment appears to have shifted, at least for the time being, towards the persuasion that growth and earnings expectations may be overstated,” they said, noting that risk-averse investors were ditching commodities.
In a sign of lingering fears of the spread of the Delta variant, the cross between the Australian dollar and the Swiss franc, a favorite indicator in currency markets for economic recovery bets, fell to its lowest level since December. 2020, at 0.6714 francs, according to Refinitiv data.
Against a basket of rivals, the US dollar strengthened broadly on Tuesday, closing in on a high of 93.041 reached in early April in the previous session.
Yields in the United States rose after Monday’s sharp rise. The 10-year yield rose to 1.217% from a close of 1.181%, a level last seen in February.
However, although the US yield curve steepened slightly, the spread between the 10-year and 2-year yields remained close to February lows, signaling investors’ doubts about growth prospects.
In Europe, Germany’s 10-year yield, the bloc benchmark, briefly fell to -0.403%, hitting a new low since February, and was down about 1 basis point to -0.398%, as of 0733 GMT.
Oil prices stabilized after falling around 7% in the previous session due to concerns about future demand and following the OPEC + agreement to increase supply.
Brent crude gained 0.7% to $ 69.11 a barrel. The US crude contract for August delivery, which expires Tuesday, rose 0.9% to $ 66.64 a barrel.
Spot gold was unchanged at $ 1,812.16 an ounce, after hitting a one-week low of $ 1,794.06 in the previous session.
(Reporting by Tom Arnold and Kane Wu; additional reporting by Andrew Galbraith; editing by Michael Perry and Jacqueline Wong) Translate serenitymarkets