European equities set new records; miners slide

(Reuters) – European stocks hit a new high on Monday after comments from European Central Bank chief Christine Lagarde helped push back bets of a monetary policy tightening, while a drop in miners limited earnings.

The DAX chart of the German stock index is pictured on the stock exchange in Frankfurt, Germany on November 11, 2021. REUTERS / Staff

ECB President Lagarde said the current spike in inflation would be longer than expected, but would subside next year, so political action now would hit the economy just as price growth begins to moderate on its own.

The continent-wide STOXX 600 index rose 0.4%, while the German DAX index gained 0.3%, with both indicators reaching a new high.

“Comments from ECB Governor Lagarde highlighted the current dovish attitude to inflationary pressures, with their first rate hike still scheduled for 2023,” said Joshua Mahony, senior market analyst at IG.

The leading French CAC 40 also reached a record level, up 0.5% thanks to a rise by Airbus. The European aircraft maker has received a multi-billion dollar order for 255 A321neo single-aisle jets from airlines in the portfolio of private equity firm Indigo Partners.

The STOXX 600 hit a series of records this month as corporate earnings and accommodative central bank policy decisions boosted investor confidence, helping to deflect attention from a COVID-19 resurgence in the region.

Meanwhile, the European Basic Resources Index fell 1.1% as metal prices fell following China’s pledge to “phase out” coal at the COP26 summit. [MET/L]

Data earlier today showed retail sales and industrial production growth last month in the world’s second-largest economy exceeded expectations, fueling optimism among global investors. [MKTS/GLOB]

Austria’s government on Sunday became the first European country to reinstate a new lockdown, placing millions of unvaccinated people on restrictions amid record infection rates.

“Across Europe, the increase in COVID-19 cases has raised new concerns that restrictions could come back in place as early as the Christmas holidays,” said Oliver Males, sales representative at Spreadex.

Among other actions, Royal Dutch Shell added 2.1% after saying it would simplify its business and move its headquarters to Britain from the Netherlands.

Spanish bank BBVA was the main drag on Spain’s blue chip IBEX, losing 4.3% on its offer to buy the remainder of Garanti BBVA for up to € 2.25 billion (2.6 billion billions of dollars).

Shares of Philips, which is recalling fans due to the use of parts containing potentially dangerous foam, fell 10.6% after the company announced it was in talks with U.S. regulators over ” a new inspection of one of its facilities.

Reporting by Anisha Sircar and Shreyashi Sanyal in Bangalore; Editing by Sherry Jacob-Phillips, Aditya Soni and Andrew Heavens


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Steve R. Hansen