(Bloomberg) – European stocks extended Monday’s rebound as investors focused on rapid vaccination efforts and optimism about an economic recovery.
The Stoxx Europe 600 Index added 0.2% to the close in London, with the insurance, construction, mining and media sectors leading the gains. In contrast, the rotation of foamy tech stocks continued. The FTSE 100 index climbed ahead of Wednesday’s UK budget announcement.
Stocks rebound from last week’s declines which were triggered by higher bond yields, although investors remain cautious after China’s main banking regulator said it was “very concerned” about risks emerging from bubbles in financial markets global. With the Stoxx 600 still at around 5% of its February 2020 record, the road to recovery has become bumpy. At the same time, the likes of Goldman Sachs Group Inc. favor cyclical and value sectors in a bet on a rapid economic rebound through vaccination efforts.
“Going forward we will of course see yields rise as the economy improves, but a move backed by optimism is supposed to be soft and gentle, not like bloodshed,” said Ipek Ozkardeskaya, analyst. senior at Swissquote.
European stocks slashed gains in the afternoon as US stocks traded lower, led by tech companies. Investors will likely be keeping a close eye on economic data, such as Friday’s US jobs report, for clues about action taken after the recent surge in bond yields.
“We have important data on this week’s economic calendar, particularly US employment data that could shake sentiment once again,” Ozkardeskaya said. “A solid reading may well stimulate ‘yield optimism’ and wreak havoc on the market.”
Among notable movers, HelloFresh SE fell 6.5% as the meal kit maker kept its guidance unchanged, despite the benefits of extended lockdown measures. Kion Group AG climbed 6.5% after its view on 2021 earnings beat analysts’ estimates.
British investors are bracing for Wednesday’s budget news after press reports suggested Chancellor of the Exchequer Rishi Sunak would announce an extension of the holiday program and more specific support for the housing sector and commerce of the bruised hotel industry.
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