European stocks rose on Tuesday as investors scoured for bargains after a global stock market pullback in the previous session brought on by the threat of the Delta variant of the coronavirus.
The Stoxx 600 index rose 0.9 percent, after its biggest decline of the year. Energy companies listed on the regional benchmark gained 1.3 percent, financial services firms grew 1.1 percent, and European industries grew 1 percent.
Brent crude, the international marker of oil, rose 1.1% to $ 69.41 a barrel after losing nearly 7% on Monday as nervousness over global economic growth was compounded by producer group Opec + agreeing to increase production by 400,000 barrels per day.
The rapid spread of the Delta strain of the coronavirus has hit the developing world hard, resulted in new social restrictions in Asian countries that previously appeared to be in control of the virus and pushed UK businesses to tackle labor shortages .
However, despite some angst over the spread of variants of the virus, many investors have remained largely bullish as they examine the fundamentals that remain strong for many large countries.
Analysts expect companies listed on the MSCI Europe stock index to post profit growth of 109% year-on-year for the second quarter, while a recent Bank of America survey found that managers of funds mainly expect the Stoxx to rise this year.
âThe underlying factors that boosted markets in the first half of the year are still there,â said Marija Veitmane, senior multi-asset strategist at State Street Global Markets. âEconomic recovery, better earnings, super accommodative monetary policy and a lot of money aside from cheap savings and borrowing. It’s all still there.
The benchmark 10-year T-bill yield, which moves inversely to its price, added 0.03 percentage point to 1.21%. Traders rallied in the safe-haven asset on Monday, sending the yield to its lowest since February.
Asian markets fell on Tuesday, however, as concerns persisted over the effect of the Delta variant on economic growth.
âInvestors fear that a new epidemic could potentially hamper the pace of economic reopening,â said Tai Hui, chief Asian markets strategist at JPMorgan Asset Management. âThe next one to two months will be an important litmus test of governments’ strategy to normalize lives and economic activities amid the threat of the pandemic. “
Japan’s benchmark Topix index fell 1% while Hong Kong’s Hang Seng index reversed its initial gains to lose 0.8%. The Chinese CSI 300 index of stocks listed in Shanghai and Shenzhen traded flat.
In currency markets, the pound fell another 0.2% against the dollar to $ 1.3649 after losing 0.7% on Monday, marking its lowest level since early February.
Britain’s currency has been hit by a sudden resurgence of Covid-19 outbreaks just as the government removed the latest of its restrictions to contain the virus. On Monday, the US Centers for Disease Control and Prevention placed the UK on its highest level of Covid travel warnings, urging Americans not to visit as England celebrated ‘Day of the freedom”.
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