By Steve Goldstein
European stocks on Tuesday traded in a tight range, as one leading bank said the region was vulnerable to a stalling economy as COVID-19 cases remain elevated.
Up 0.8% on Monday, the Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.78% was fractionally lower. The German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.97% , French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.82% and U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.31% each hugged the flat line.
U.S. stock futures /zigman2/quotes/208225921/composite SP +1.43% eased after a 465-point advance for the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.85% on Monday. “U.S. investors appeared to welcome President Trump’s return to work, and signs of progress towards additional fiscal stimulus also contributed to the index gains,” said Ian Williams, strategist at Peel Hunt.
Strategists at Citigroup, led by Robert Buckland, said they are worried about “a second COVID-19 wave, more EPS (earnings per share) downgrades, extended valuations and a chaotic U.S. election.” They downgraded their view on Continental European stocks to underweight while keeping U.K. stocks at neutral and U.S. equities at overweight. “The region’s cyclical tilt will leave it vulnerable if economic recovery stalls. A strong euro will also weigh on corporate performance,” said the strategists on European stocks.
Per capita, Spain, the Czech Republic, and France have the highest number of COVID-19 cases over the last 14 days, according to the European Centre for Disease Prevention and Control.
Suez /zigman2/quotes/205820620/delayed FR:SEV +0.40% shares rose 4% after Veolia Environnement /zigman2/quotes/200641726/delayed FR:VIE +1.89% disclosed it has bought a nearly 30% stake in its water-and-waste management rival that it wants to fully buy. Suez said it would act to protect “the interests of its employees, its customers and all its stakeholders, in particular to ensure equal and fair treatment of all its shareholders and avoid a creeping takeover or de facto control.”
French electric utility Engie /zigman2/quotes/207568496/delayed FR:ENGI -0.61% , which sold the Suez stake to Veolia, rose 2%.
Shares in Puma /zigman2/quotes/203655455/delayed XE:PUM -1.25% fell 2% after luxury-goods company Kering /zigman2/quotes/204653408/delayed FR:KER -1.39% unloaded a nearly 6% stake in the sneaker maker.
Watches of Switzerland /zigman2/quotes/212606835/delayed UK:WOSG -0.94% surged 21%, as the retailer hiked its annual sales and margin guidance, after better-than-expected 18% sales growth in the first 10 weeks of its fiscal second quarter.
BHP /zigman2/quotes/203323256/delayed UK:BHP -0.99% was steady after reaching a $505 million deal to buy Hess’s /zigman2/quotes/203832174/composite HES +6.00% stake in a deep water Gulf of Mexico oil project.