Europe midday: Covid, inflation worries take the bounce out of rebound
European shares slipped back from early gains as the persistent twin threats of rising Covid cases and inflation continued to weigh on investors' minds.
The pan-European Stoxx 600 index was up 0.23% at midday having risen 1% in early trade after fears over the rapid spread of the Covid Delta variant saw stocks fall 2.3% on Monday. All major regional markets were also sliding towards the red, with Germany's DAX flat.
"In a word, stagflation. That’s how I’d sum up what this market angst is all about. Or at least, the spectre of stagflation," said Markets.com analyst Neil Wilson..
"Simply put, growth is already decelerating and downside risks to the growth outlook are darkening due to rising cases, Delta and other emerging variants, as well as worries about potentially lower vaccine efficacy. At the same time, inflation is shooting higher. Supply side constraints (supply chain tightness, availability of labour/parts) are a problem central bankers cannot solve."
New Covid cases are surging in Europe and the US as the variant spreads, largely among the young and unvaccinated, or the partially vaccinated.
In equity news, shares in miners BHP and Anglo American were both higher as they provided upbeat production numbers.
Swiss bank UBS rose after it posted a 63% jump in second-quarter net profit, helped by a booming wealth management business.
Among decliners, Sweden’s Volvo fell as it warned of further production disruptions and stoppages this year due to chip shortages.
Swedish industrial manufacturer Alfa Laval added 6% after beating profit estimates, while at the bottom of the index, compatriot home appliance company Electrolux fell more than 8% after issuing a supply chain warning.