Utilities, telecoms support European stocks; autos slide

This post was originally published on this site

By Sruthi Shankar

© Reuters/STAFF FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt

(Reuters) -European stocks hit new highs on Tuesday, lifted by travel and real estate shares, but weak German industrial output data and doubts over the United Kingdom lifting restrictions later this month capped gains.

The pan-European STOXX 600 index was flat after notching a record high earlier, with sectors considered more stable such as real estate and telecoms leading the gains.

The travel and leisure index rose 0.7%, supported largely by gains in low-cost carrier easyJet after Goldman Sachs upgraded the stock to “buy”.

Data showed German industrial output fell unexpectedly in April, in a further sign that semiconductor shortages and other supply bottlenecks are hampering the recovery in Europe’s largest economy.

Automakers fell 0.5% after a six-day rally that took the index close to its record peak.

Video: Tech takes Wall Street higher (Reuters)

Tech takes Wall Street higher
What to watch next

“I think it says more about the supply constraints. The big question is how long will these remain,” said Teeuwe Mevissen, senior market economist at Rabobank.

Load Error

“Markets are in a wait-and-see mode. Valuations are high, and they need new catalysts to justify further buying.”

UK’s blue-chip FTSE 100 held steady, boosted by a weaker pound and a 1.6% rise in British American Tobacco after it raised its annual revenue growth forecast.

Investor concerns were, however, stoked as The Times reported that Britain’s next phase in easing of lockdown on June 21 could be delayed by a fortnight amid concerns over the spreading of new variants of COVID-19.

Global markets traded in a tight range ahead of a policy meeting of the European Central Bank and U.S. inflation data this week.

The ECB is expected to reaffirm its emergency bond purchases programme at the current pace as signs emerge that the euro zone is not recovering as fast as expected, while the inflation reading would be the last key data ahead of the Federal Reserve meeting next week.

Swiss contract drugmaker Lonza gained 4.5% after Goldman Sachs upgraded the stock to “buy”, while German airline Lufthansa fell 2.9% after the brokerage downgraded the stock to “sell”.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)

Continue Reading