By Jack Denton
European markets tread water on Tuesday, with many indexes hovering around flat or dipping into the red, as the price of oil continued its march higher into pre-pandemic highs.
The pan-European Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP -1.01% fell 0.3%, while London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.28% and Paris’ CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.81% were both slightly below flat. Frankfurt’s DAX /zigman2/quotes/210597999/delayed DX:DAX -0.93% fell near 0.5% after hitting an all-time high on Monday.
Dow futures /zigman2/quotes/210598065/realtime DJIA -0.56% were pointing down near 40 points, set for a weak open after rising more than 237 points on Monday to close at 31,385.
Markets were mixed in early European trading as momentum from the rally over the past week appeared to slow.
The progress of the COVID-19 vaccine rollout in much of Europe, set against the backdrop of worries about vaccine efficacy in the face of new variants of the coronavirus that causes the disease, remains a wider concern.
Michael Hewson, an analyst at CMC Markets, said that investor enthusiasm in Europe “is much more muted, and perhaps a little more cautious, despite the DAX pushing up to record highs yesterday, with markets here opening mixed.”
“This failure is a little perplexing given that the recent moves in commodity prices, as well as yields are more likely to suit the likes of the FTSE 100 big caps of big oil and the banks, however concerns over the travel sector still appear to be acting as a drag,” Hewson said.
However, Hewson noted the “continued buoyancy in global equity markets,” largely due to broader optimism over reflation and an eventual recovery.
But oil hasn’t paused for breath since benchmark Brent broke the $60 per barrel threshold on Monday — a landmark price signifying pre-pandemic highs. It is pushed a further 0.5% higher on Tuesday to close in on $60.90.
Oil prices are now at their highest since January 2020, with crude in the midst of its longest rally in more than two years.
European-listed oil stocks all rose in early trading, with shares in BP /zigman2/quotes/202286639/delayed UK:BP +1.25% , Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA +0.80% , and Eni /zigman2/quotes/209584888/delayed IT:ENI +1.04% all lifting.
Total was one of the biggest risers, surging near 3% on the back of strong oil prices and upbeat quarterly results. The French oil major said earnings largely rebounded in the fourth quarter of 2020 as oil prices stabilized, capping a turbulent year. A $10 billion write-down on assets, largely due to the pandemic, pushed the group to a $7.2 billion loss for the full year.
Shares in Ocado /zigman2/quotes/207225647/delayed UK:OCDO -4.87% , the high-tech British grocer that has emerged as one of the “stay-at-home economy” winners through the pandemic with its delivery service, traded near 2% lower in London following fourth-quarter results. Revenue came in slightly below expectations while earnings beat estimates. Analysts noted the stock move downward may be due to profit-taking, as the share price is up more than 120% from a year ago.
Bitcoin /zigman2/quotes/31322028/realtime BTCUSD -0.89% surged above $47,000 to fresh highs on Tuesday in the crypto asset’s most recent rally. The latest surge follows news that electric-vehicle maker Tesla /zigman2/quotes/203558040/composite TSLA +1.75% has bought $1.5 billion worth of bitcoin and may accept it in the future as payment.