Europe close: Stocks end mixed amid China concerns, valuations drag
European stocks ended the Tuesday session on a mixed note as a weaker-than-expected reading on US consumer prices failed to assuage inflation concerns and amid Covid-19 concerns in China.
"Global stocks have failed to maintain their inflation-fuelled gains, with the DAX providing the only area of strength as UK and US indices lose ground," said IG senior market analyst Joshua Mahony.
"The release of US inflation data provided some respite for the Federal Reserve today, with monthly inflation falling to the joint lowest level this year. The big question today is whether the decline in both core and headline inflation marks the beginning of the end for ‘transitory’ above-target pricing as alluded to by the Fed."
Also weighing on sentiment, overnight authorities in Beijing ordered travel curbs in the southeastern province of Fujian, even if following a tiny outbreak of Covid-19 cases.
The benchmark Stoxx Europe 600 index drifted lower by 0.01% to 467.65, while Germany’s DAX was 0.14% higher at 15,722.99 and Italy’s FTSE Mib advanced 0.39% to 26,027.07.
France's Cac-40 on the other hand was down 0.36% at 6,652.97 and Spain's Ibex 35 dipped 0.41% to 8,780.0.
According to a survey by Bank of America, in September, 58% of fund managers expected equities to continue rallying in 2021, up from 51% in August.
Yet the proportion who expected the euro area economy to keep improving on a 12-month basis had shrunk from 94% in March to 47% in the current month, although that too was better than August's tally, of 44%.
So while reopening had fallen out of favour, reflation remained popular, they judged.
In equity markets, miners were under pressure as copper prices fell, with the Stoxx Europe 600 basic resources index down 1.94% at 579.83.
Worth noting, investors were waiting on a raft of key Chinese activity indicators due out the next day.
Luxury stocks weighed particularly heavily on the French index, with Kering, LVMH and Richemont all in the red amid concerns about rising Covid cases in China, which is a big consumer of luxury brands.
Elsewhere, Danish brewer Carlsberg was knocked lower by a double downgrade to ‘sell’ at Berenberg, while British Airways and Iberia parent IAG flew lower after a downgrade to ‘neutral’ from ‘outperform’ at BNP Paribas.
On the upside, jewellery company Pandora rallied after saying it aims to achieve sales growth of 6% to 8% in the coming years.