By Jack Denton
European stocks marched further into the green on Tuesday, surpassing record highs notched in early May, as Germany’s main stock market index was boosted by a $22 billion deal between two property giants.
The pan-European Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.56% lifted 0.13% and Frankfurt’s DAX /zigman2/quotes/210597999/delayed DX:DAX +0.59% rose 0.2% with both indexes surpassing record highs through the trading day. In London, the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.47% ended 0.2% lower while the CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.93% in Paris was 0.1% lower.
U.S. stocks were lower, with Dow industrials /zigman2/quotes/210598065/realtime DJIA -0.02% around 22 points down by midday after futures had remained positive for much of the premarket. The index rallied 186 points on Monday to close at 34,393.
Analysts noted that macro forces shaping markets remained largely unchanged, with the focus in Europe increasingly turning to easing COVID-19 restrictions. Inflation concerns remain in investors’ minds and continue to shape messages from central banks.
“Inflation jitters have continued to subside among investors for now, with expectations of future Fed hikes over 2021 and 2022 moving back slightly once again yesterday following their increase after the U.S. CPI [consumer-price index] reading for April,” said strategists at Deutsche Bank /zigman2/quotes/203042512/composite DB -0.07% , led by Jim Reid.
Paul Donovan, the chief economist at UBS Global Wealth Management, noted that inflation remains a focus but central banks globally are reiterating calming messages for markets.
“Yesterday, it was the Bank of England’s turn to point out that current price rises are transitory and narrowly focused. Economists and central bankers clearly support a ‘don’t panic’ strategy. Some investors see inflation around every corner,” Donovan said.
Boosting spirits in Europe was German business sentiment, measured by the Ifo business-climate index, which came in at 99.2 points for May compared with 96.6 in April — the highest point in two years. Expectations were for the index to notch 98 points.
Adding buoyancy to German markets, shares in property company Deutsche Wohnen /zigman2/quotes/207792898/delayed XE:DWNI -0.11% soared near 16%, after rival Vonovia said it had agreed to acquire the group in a cash deal worth around €18 billion ($22 billion). Both companies are constituents in the DAX index.
Shares in Vonovia /zigman2/quotes/200752665/delayed XE:VNA +0.37% , which is Europe’s largest residential property group, dropped near 6%. The deal for Deutsche Wohnen, at €53.03 per share, values the group at a near-18% premium to the stock price before the agreement was announced. Deutsche Wohnen stock hasn’t traded above €50 per share since 2007, before the 2008-09 financial crisis.
Industrial software group Aveva’s /zigman2/quotes/202038414/delayed UK:AVV -0.70% stock rose near 2%, after the group’s full-year financial results outpaced expectations on both sales and earnings. One of the U.K.’s oldest technology companies, analysts at Swiss bank UBS /zigman2/quotes/206172872/composite UBS -0.06% noted that Aveva showed a strong margin and that its recovery from the COVID-19 pandemic seemed under way.
Shares in Argo Blockchain /zigman2/quotes/209037613/delayed UK:ARB -0.75% , a London-listed cryptocurrency miner, rose more near 13%, after the group said it has joined the new Bitcoin Mining Council to promote transparency around energy usage and accelerate sustainability initiatives. The crypto space, and bitcoin /zigman2/quotes/31322028/realtime BTCUSD +0.54% in particular, has come under fire from critics including electric-vehicle company Tesla’s /zigman2/quotes/203558040/composite TSLA +3.26% chief executive Elon Musk over its environmental impact.