Friday, September 24

European stocks close flat, set for August gains


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European stocks ended flat on Monday as a British holiday made for languid trade, but were set for strong monthly gains on expectations that continued central bank support would sustain an economic recovery.

The Europe-wide STOXX 600 ended largely unchanged at 472.68 points but was on course to end August with a 2.4% rise – its seventh straight month of gains in what would be its longest such winning run in over eight years.

Chemical stocks, which are likely to benefit from an economic bounceback, were the best performers for the day, rising 0.6%, while technology stocks rose 0.5%.

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Global equities remained supported after US Federal Reserve Chairman Jerome Powell explained on Friday why the central bank saw no rush to tighten monetary policy, and offered no signal on when it plans to cut its asset purchases beyond saying it could be “this year.”

“For equity markets, the gradual process is positive, because it is clear the Fed wants to continue to support the economy for as long as needed to achieve a full recovery,” said Willem Sels, chief investment officer of private banking and wealth management at HSBC.

“It is therefore no surprise that cyclical sectors reacted most positively to the news.”

Oil and gas stocks closed flat as crude prices retreated from three-week highs after a powerful hurricane slammed into the US Gulf coast, forcing shutdowns and evacuations of hundreds of offshore oil platforms..

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After hitting record highs in mid-August, European stocks have struggled to reclaim the highs on worries about tighter regulation on Chinese tech firms and as a resurgence in COVID-19 cases prompt fresh lockdowns in parts of the world.

A study showed people who get the Delta variant of the coronavirus are twice as likely to be hospitalized as those who were infected by the Alpha variant.

However, the European Central Bank expects the more contagious variant to have a limited impact on the euro zone economy due to an advanced vaccination campaign.

Among individual stocks, French shares of carmaker Stellantis fell 0.8% after the company said it was extending production halts at several plants in Europe due to a shortage in microchips. (Reporting by Sruthi Shankar and Ambar Warrick in Bengaluru; Editing by Subhranshu Sahu and Pravin Char)

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In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.

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