Europe close: Stocks bounce back from Monday's sell-off
European stocks managed a positive close on Tuesday, after the previous session’s sell-off saw investors go bargain hunting, despite ongoing concerns over the Omicron variant of Covid-19.
At the close, the pan-European Stoxx 600 was up 1.39% at 473.84, with the CAC 40 in Paris last up 1.38% and Frankfurt’s DAX in the green by 1.36%.
The common currency was in negative territory, meanwhile, with the euro last trading down 0.41% on sterling at 85.04p, and falling 0.14% against the dollar at $1.1263.
“European markets are leading the way higher today, as traders enjoy a change from the recent selling pressure that has blighted global indices,” said IG senior market analyst Joshua Mahony.
“While today’s rebound does provide some grounds for optimism in the investment community, it does seem to be playing into a wider theme of volatility as traders gauge whether this latest dip is there to be bought.
“Invariably the festive period can bring lower volumes, raising the likeliness of strong moves.”
US markets fell sharply overnight after Democrat senator Joe Manchin refused to support President Biden’s $1.9trn ‘Build Back Better’ infrastructure bill, raising fears that US GDP could be substantially lower in 2022 as major building projects faced being postponed.
In the UK, the FTSE 100 ended the session higher after public sector borrowing fell in November after spending on the pandemic eased and the government’s furlough scheme came to an end, but was still the second-highest figure for the month since records began in 1993.
On the economic front, consumer confidence in Germany decreased noticeably in December according to a closely-watched survey, with both economic and income expectations falling significantly, along with the propensity to buy.
According to the GfK Consumer Sentiment Study, the economic outlook among consumers clouded over noticeably at the end of the year, with the indicator dropping 13.9 points to 17.1.
It marked the third decrease in a row, with interrupted supply chains particularly causing “serious problems” for a number of companies.
The survey said the lack of primary products, such as semiconductors, was leading to a slowdown or even complete standstill in production, which had a knock-on effect on the sentiment of employees in the form of short-time working.
“Consumer sentiment continues to be under a lot of pressure from two sides as the year draws to a close,” said GfK consumer expert Rolf Bürkl.
“High case numbers due to the fourth wave of the Corona pandemic with further restrictions, as well as significantly increased prices, are putting more and more pressure on consumer sentiment.”
In equity markets, shares in French transport conglomerate Bollore rocketed 11.54% after it received a €5.7bn offer from Mediterranean Shipping Company for its African logistics assets.
Semiconductor and chip stocks were in positive territory after US chipmaker Micron Technology beat market expectations in its trading update overnight.
ASML Holding was up 3.6%, ASM International added 0.5%, Infineon Technologies was ahead 1.65%, and STMicroelectronics was 1.17% firmer.