European stocks reached record highs on Monday as miners led gains after commodity prices surged and optimism about the reopening of economies and easy monetary policy lifted sectors that typically benefit from a recovery.
The pan-European Stoxx 600 index rose 0.1 per cent, ending at an all-time high, with miners rallying 2.3 per cent to a 10-year high. London-listed miners such as Rio Tinto, BHP Group and Glencore rose between 1.7 per cent and 2.6 per cent. China's benchmark iron-ore futures and steel futures hit all-time highs, and copper prices touched record highs on expectations of improved demand amid tightening supply.
"The boom in commodity prices is good news for the materials or the cyclical sectors," said Rupert Thompson, chief investment officer at Kingswood Group in London.
“It cements the idea that you’ve got further rotation towards value and commodity sectors. But on the other hand you’ve got the clear risk that it does exacerbate worries about inflation.”
Dublin
Ryanair shares were down 1 per cent after the UK government set out a limited reopening of travel, but losses were cushioned by hopes that a bigger take-off would be on the cards for June.
Expectations that unrestricted travel will be possible later this year due to the rollout of the vaccine have lifted airline shares this year.
Ryanair is currently trading at a near record high of €17.31. Bank of Ireland and AIB had a strong session, trading up 4.6 and 2.9 per cent respectively, amid signs of gathering consumer activity in the Irish market after months of lockdown.
Glanbia shares rose 1.6 per cent to €13.55 despite the decision by heritage group An Taisce's decision to appeal a High Court ruling granting planning permission to the company's €140 million cheese manufacturing plant on the Kilkenny-Waterford border. The appeal is likely to further delay the project.
London
London’s FTSE 100 dipped on Monday as weakness in industrial stocks and a stronger pound following the outcome of the Scottish election outweighed gains in miners.
The exporter-heavy index dipped 0.1 per cent, with large dollar-earning consumer staples companies, including Diageo, British American Tobacco and Relx slipping between 0.7 per cent and 2.3 per cent as the pound strengthened. The pound climbed to as high as $1.4158, its strongest in more than two months. Miners, including Glencore, BHP Group and Rio Tinto provided the biggest boost as copper prices touched record highs on expectations of improved demand amid tightening supply.
Aer Lingus-owner IAG, Wizz Air and easyJet fell between 1 per cent and 2.5 per cent.
Europe
The European travel and leisure sector declined 1.4 per cent, with highly-valued technology stocks dropping 2.4 per cent. The earnings season entered the home stretch, with about two-thirds of Stoxx 600 companies having reported their first-quarter results.
German biotech company BioNTech jumped 8.8 per cent after revealing plans to build a manufacturing site for its vaccines based on messenger RNA (mRNA) technology in Singapore.
French lender Société Générale rose 2.9 per cent on plans to pare back risk exposure in its global markets business and focus more on financing and advising on deals.
New York
The Dow Jones Industrial Average hit a record high on Monday on hopes that interest rates would remain lower for longer, while the S&P 500 was subdued as a slide in technology shares offset a surge in commodity-linked energy and material stocks.
The Nasdaq, on the contrary, dropped 1.5 per cent as some of the market leaders of 2020 – Apple, Amazon, Facebook and Tesla – fell between 1.4 per cent and 4 per cent.
The materials sector hit a record high as miners and makers of steel products gained after gold, copper and aluminium scaled new peaks.
The energy index jumped to its highest in more than a year after a cyber attack on top US pipeline operator Colonial Pipeline shuttered a fuel network that transports nearly half of the East Coast’s supplies.
The S&P 500 and the Dow ended at record closing highs on Friday as an unexpected slowdown in monthly jobs growth fuelled bets that the US Federal Reserve would remain accommodative for longer.
With latest economic reports depicting that the US economy is not recovering at the explosive pace previously forecast, inflation numbers and retail sales data this week could chart the next course for US equities.
"Inflation data is pretty important from a market leadership perspective," said Keith Parker, head of US and global equity strategy at UBS. – Additional reporting: Reuters
