European Markets Gain Ground As Tech And Mining Sectors Outweigh Ericsson’s Losses

Today in European markets major stock index moved higher, with gains in mining and technology stocks offsetting losses at Ericsson, which reported a setback from global supply chain issues.

Utilities (.SX6P), Miners (.SXPP), and technology stocks (.SX8P) led the morning gains on the pan-European STOXX 600 (.STOXX).

The gain in leading Asian indices was also fueled by technology stocks, which followed in the footsteps of their Wall Street counterparts.

According to Thomas Mathews, a market economist at Capital Economics, European markets continue to outperform offshore markets.

“The days of large, prolonged market rallies are passed, but we can hope to see European equities crawling higher for a while as rates start to climb and inflation picks up.”

Telecom equipment company Ericsson (ERICb.ST) lost 3.3 percent following its quarterly reports, while French food major Danone (DANO.PA) declined 0.8 percent after reporting higher costs and weaker sales growth in the third quarter, limiting the market’s advances.

Also Read: Top 10 UK Stocks to Buy Now

Investors will scour Europe’s third-quarter earnings for inflation indications.

Investors are examining business results for any evidence that supply-chain bottlenecks, labour shortages, and rising energy prices are beginning to erode profitability as Europe’s third-quarter reporting season gets into high gear.

As per Refinitiv I/B/E/S data, third-quarter earnings in Europe are predicted to rise 46.7 percent from the same time in 2020, with analysts’ earnings estimates moderating recently but maintaining optimism.

“Because of how much good news is already reflected in share prices so it’s hard in seeing how additional earnings optimism would raise the market too much at this stage,”Mathews added.

After a 3.4 percent dip in September, the STOXX 600 has risen 2.8 percent in October, as investors shifted to riskier assets in anticipation of a stable results season.

Philips (PHG.AS), a Dutch health tech firm, lowered its financial outlook on Monday, blaming “chips and ships” for production and delivery delays caused by a scarcity of electronic components and a dearth of shipping containers.

Umicore (UMI.BR) shares also slumped after the catalytic converter company lowered its core profit forecast for 2021 owing to chip shortages.

Meanwhile, traders have been fiercely pricing in interest rate hikes, especially in the UK, to counter a rise in energy prices and other barriers pushing general prices higher, contributing to current market volatility. Traders are looking for Value investment for better returns.

Copper prices increased, supported by decades-low supply and a severe shortage of easily obtainable metal in exchange warehouses, boosting the UK’s FTSE 100 (.FTSE), which was bolstered by miners (.SXPP).

Tele2 (TEL2b.ST), a Swedish telecoms operator, fell 3.4 percent after reporting quarterly core earnings that were in line with market forecasts.

The markets were weighed down by the telecoms (.SXKP) and healthcare (.SXDP) sectors, which declined 0.5 percent and 0.2 percent, respectively.

In Asia, US Treasury rates also fell, particularly in the centre of the curve.

Oil prices increased on Tuesday, recouping earlier losses and boosted by a return of risk appetite in the markets.

Brent crude increased 0.28 percent to $84.56 a barrel. The price of U.S. oil rose 0.44 percent to $82.8 a barrel.

The current price of gold rose 0.6 percent to $1,775.2 an ounce on lower yields, while the metal stayed well within its current range.

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