European stocks pushed higher on Tuesday, led upward by shares in companies set to benefit from economic growth and a rise in inflation, even as concerns around the more contagious Delta variant of COVID-19 continued to weigh on markets.
The pan-European Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.57% rose 0.3% while London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.10% ticked up 0.2%. In Paris, the CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.44% lifted 0.1% and Frankfurt’s DAX /zigman2/quotes/210597999/delayed DX:DAX -0.61% climbed 0.9%. U.S. stocks were trading at record highs, with Dow industrials up more than 70 points by midday after the index dropped 150 points on Monday to close at 34,283.
Broadly, European trading was characterized by a resurgence of the “reflation trade”—a boost among stocks that are expected to benefit from the continued economic recovery and reopening from Covid-19.
Mining, industrials, and financials were the sectors that added the most buoyancy to the Stoxx 50 /zigman2/quotes/210599380/delayed XX:SX5E -0.68% index of Europe’s largest companies and kept the major indexes across the continent in the green.
The boost came after losses on Monday amid rising worries over the contagious Delta variant of COVID-19. Spain, Portugal, and Malta were among the countries that added new travel restrictions on the U.K., where the variant is prevalent, with Hong Kong banning direct flights from the country.
“European stocks didn’t get off to the best start to the week yesterday, with big declines in energy as well as travel and leisure stocks, as rising Delta variant cases across Europe and Asia prompted the implementation of new border restrictions, for vaccinated and unvaccinated travellers alike,” said Michael Hewson, an analyst at CMC Markets.
Hewson said that the European session “looks set for a tepid start after the losses of yesterday.”
In the day ahead, investors can expect the European Commission’s Euro area Sentiment Index, or ESI, which analysts expect to signal a notable acceleration in economic activity at the end of the second quarter of 2021.
“Judging from the national surveys, not least from Germany and Italy, the headline euro area ESI is likely to rise to the highest since 2000,” analysts at Daiwa Capital Markets said.
Mortgage lender Nationwide said that British house prices rose 13.4% in June compared with the same period last year—the largest annual rise since 2004. U.K. housebuilder stocks rallied on the news, with shares in Persimmon /zigman2/quotes/206444744/delayed UK:PSN +0.68% , Taylor Wimpey /zigman2/quotes/208623755/delayed UK:TW +0.74% , and Barratt Developments /zigman2/quotes/209812640/delayed UK:BDEV +1.10% at the top of the list of the FTSE 100’s risers.
Shares in French electric company Rexel /zigman2/quotes/204763340/delayed FR:RXL +1.59% rose more than 4% after the group raised its sales forecast for 2021. Rexel now expects same-day sales growth of between 12% and 15%, up from a prior forecast of between 5% and 7%.
Hunting /zigman2/quotes/203732303/delayed UK:HTG -2.11% stock slipped more than 5% after the oil services group said it expects to post a modest loss in the first half of the year, driven by market conditions as well as the disruption to oilfields in Texas in February during a severe winter weather event.
Shares in Argo Blockchain /zigman2/quotes/209037613/delayed UK:ARB -2.38% , one of the few publicly-listed crypto asset miners, fell more than 5% as the British group said it had taken out a £14 million short-term loan to meet operating cash flow requirements and build out a data centre in Texas. The loan, agreed with digital asset investor Galaxy Digital, uses a portion of Argo’s bitcoin holding as collateral. The price of bitcoin /zigman2/quotes/31322028/realtime BTCUSD -21.43% has fallen more than 40% since highs above $60,000 earlier this year.