European stocks ended Tuesday decidedly higher after extending gains from their best session in four months a day earlier, as a rise in shares of oil and utility companies helped counter losses in miners.
The pan-European Stoxx 600 rose 0.8 per cent, with the utility sector rising more than 1.5 per cent. Danish jewellery maker Pandora jumped 7.2 per cent after reporting a 12 per cent rise in organic sales in February.
The continent’s stock markets have come under pressure as a jump in bond yields on the back of quick vaccine rollouts and a massive US coronavirus relief package have fanned worries about a potential rise in inflation.
Still, major European indexes have fared better than some of their tech-heavy US peers. "European market is much less tech-heavy than the S&P 500, much less growth-dominated, so higher bond yields are not such a negative," said Nick Nelson, head of European equity strategy at UBS.
Dublin
The Iseq index rose 0.75 per cent to 7,871, roughly tracking trends elsewhere. Bank of Ireland was one of the stronger performers, rising 3.8 per cent to €3.85.
This comes on the back of its recent announcement of branch closures. The bank is planning to close 88 branches in the Republic and a further 15 in Northern Ireland as it moves to streamline its operation here. Rival AIB was up marginally at €1.96. Cairn Homes, meanwhile, was up 2.8 per cent to €1.02 despite reporting a decline in revenue and profits last week on the back of the pandemic.
Hostelworld, the Irish-based online booking platform, rose by more than 10 per cent to €1.03. Last month, it agreed a new €30 million five-year term loan facility with lenders to bolster its liquidity position.
Agri-services business Origin Enterprises had another good session, rising 4.5 per cent to €3.69. Last week, it announced the acquisition of Green-tech, a UK manufacturer and distributor of landscaping, forestry and grounds maintenance equipment.
London
London’s FTSE 100 ended higher on Tuesday thanks to strength in industrials and other defensive sectors, although broader gains were capped by weakness in mining stocks due to a drop in metal prices.
The blue-chip FTSE 100 index finished up 0.2 per cent, with industrial stocks and defensive plays rising as investors bet on them benefiting the most from an economic reopening once the coronavirus pandemic recedes.
Mining stocks, including Rio Tinto, Anglo American and BHP, were among the biggest laggards, falling between 2.4 per cent and 4.4 per cent. "Yesterday the market had huge gains. It's hard for the market to maintain explosive gains without a good reason and arguably today they don't have a good one and there is a bit of caution around the bond yield issue," said Connor Campbell, analyst at Spreadex.
Europe
The MSCI Europe value index, which includes banking, energy and auto stocks, has risen about 9 per cent so far this year, while its growth counterpart that tracks tech and healthcare stocks is up 2 per cent.
Miners fell 1.8 per cent as Dalian iron ore futures tumbled by the 10 per cent daily limit on anti-pollution restrictions in China's top steelmaking city of Tangshan, while metal prices were also hit by a firm dollar.
Investors will closely watch a European Central Bank meeting later this week to see if policymakers have decided to step up the pace of emergency bond purchases to calm skittish markets.
"For the ECB, this will provide a challenging environment, with policymakers in Frankfurt both unwilling and unable to match the Federal Reserve's dovishness," said Stephen Innes, chief global market strategist at Axi.
German automotive parts maker Continental fell 8 per cent after it forecast a 2021 outlook below expectations.
New York
US stocks advanced on Tuesday, with the Nasdaq jumping more than 3 per cent to recoup its losses from the previous session, as US bond yields retreated and investors picked up battered technology stocks.
Tesla jumped about 14 per cent, while Apple, Amazon and Microsoft gained between 2.3 per cent and 3.4 per cent after sharp losses in recent weeks as a rise in yields raised concerns over their high valuations. "Usually when things are significantly sold off, like the tech sector, traders tend to buy in," said Matthew Stucky, portfolio manager at Northwestern Mutual Wealth Management.
Signs that a $1.9 trillion (€1.6 trillion) coronavirus relief package was nearing final approval sparked a spike in yields on Monday, pushing the tech-heavy Nasdaq to end more than 10 per cent below its February 12th closing high that confirmed a correction.
"Potential headwind for the market is [when] interest rates rise further from this point over the short period . . . since they have risen too fast in too little time," said Michael Sheldon, chief investment officer at RDM Financial in Westport, Connecticut. – Additional reporting by Reuters
