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June 11, 2021, 8:31 a.m. EDT

European stocks add to gains as investors aren’t scared of U.S. inflation spike

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By Barbara Kollmeyer

European stocks climbed on Friday, as investors decided stronger-than-expected U.S. inflation wasn’t much to worry about, while falling bond yields increased appetite for equities.

Investors will also be keeping an eye on the G-7 (Group of Seven) meeting of leaders in Cornwall, England on Friday.

Shaking off a sluggish start, the Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.17% , up nearly 1% for the week so far, climbed 0.5%, while the German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.16% rose 0.5%, with the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.21% and the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.25% up 0.6% and 0.5%, respectively.

U.S. stock futures /zigman2/quotes/209948968/delayed ES00 -0.86% /zigman2/quotes/210407078/delayed YM00 -0.29% /zigman2/quotes/210219788/delayed NQ00 -1.63% turned higher , following a positive day on Wall Street, with the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.98% logging a record finish, as investors brushed aside data showing annual U.S. consumer prices climbed 5% in May to a 13-year high.

Yields continued to fall on both sides of the Atlantic, with that of the German 10-year bund /zigman2/quotes/211347112/realtime BX:TMBMKDE-10Y +3.35% down 1 basis point to -0.272%, and the 10-year U.S. Treasury bond yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +1.81% down 2 basis points to 1.441%.

Read: Inflation is surging. How high will it go? Check out MarketWatch’s new tracker.

Markets have been concerned that signs of rising inflation globally will push central banks to tighten ultra-easy monetary policies and stimulus enacted to fight the COVID-19 pandemic fallout. But the Federal Reserve has been fairly consistent in its reassurances that the data are transitory.

“It appears as though the market is so confident that the Fed will maintain its current policy stance that even a 5% CPI [consumer-price index] inflation in the U.S. didn’t scare the markets,” said Fawad Razaqzada, market analyst at ThinkMarkets.

“With stocks rising, and both the dollar and yields falling, investors clearly believe that the Fed will still stick to script next week and re-iterate its view that the upsurge in prices is going to be temporary,” he said in a note to clients. The drop in bond yields has sparked appetite for all risk assets, notably low and zero-yielding assets such as technology growth stocks and precious metals, he added.

Razaqzada said markets were also relieved to see a dovish European Central Bank, which on Thursday left interest rates unchanged and made no tweaks to the size of its asset-buying programs at its policy meeting. 

Read: No ECB ‘taper tantrum,’ but stage set for market showdown later this year

On the data front, the U.K. economy expanded 2.3% in April, its fastest monthly pace since July 2020, the Office for National Statistics said.

Banks were a weak spot for Europe, falling in step with bond yields. Shares of Deutsche Bank /zigman2/quotes/203042512/composite DB -0.63% slid 3%, those of Société Générale /zigman2/quotes/206663756/delayed FR:GLE +0.06% lost 1.6%, and Crédit Agricole /zigman2/quotes/209264506/delayed FR:ACA -0.13% dropped 1%.

But resource stocks were rising, with metals pricing climbing. Shares of miners Rio Tinto /zigman2/quotes/208934945/delayed UK:RIO +0.43% /zigman2/quotes/202627887/composite RIO -0.24% and Glencore /zigman2/quotes/201400686/delayed UK:GLEN +0.18% were up 1% and 2%, respectively.

Pharmaceutical stocks rose, with shares of AstraZeneca /zigman2/quotes/203048482/delayed UK:AZN +0.83% /zigman2/quotes/200304487/composite AZN +0.61% up 1.3% and Bayer HU:BAYER +1.11% rising 1%.

Another gainer was LVMH Moët Hennessey Louis Vuitton /zigman2/quotes/201350549/delayed FR:MC -0.27% , with those shares up 1.8%. Loïc Morvan, an analyst at Bryan Garnier, reiterated a buy rating on the luxury-goods group in a note to clients, saying he expects second-quarter sales to grow near 10% versus the second quarter of 2019.

“We remain quite optimistic on LVMH. We see no signs of a business slowdown in the U.S. (23% of sales) or APAC (41% of sales). Demand for luxury products from the Chinese and American clienteles is still robust,” said Morvan. First-half results for LVMH are expected in July.

/zigman2/quotes/210599654/delayed
XX : STOXX
454.40
-0.77 -0.17%
Volume: 0.00
Jan. 30, 2023 5:50p
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/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
15,126.08
-23.95 -0.16%
Volume: 54,664
Jan. 30, 2023 6:30p
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/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
7,082.01
-15.20 -0.21%
Volume: 60,633
Jan. 30, 2023 6:05p
loading...
/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,784.87
+19.72 +0.25%
Volume: 594,598
Jan. 30, 2023 4:59p
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/zigman2/quotes/209948968/delayed
US : U.S.: CME
$ 4,049.00
-35.25 -0.86%
Volume: 1.01M
Jan. 30, 2023 11:54a
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/zigman2/quotes/210407078/delayed
US : U.S.: CBOT
$ 33,948.00
-98.00 -0.29%
Volume: 99,349
Jan. 30, 2023 11:54a
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/zigman2/quotes/210219788/delayed
US : U.S.: CME
$ 12,023.00
-199.25 -1.63%
Volume: 423,209
Jan. 30, 2023 11:54a
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/zigman2/quotes/210599714/realtime
US : S&P US
4,030.72
-39.84 -0.98%
Volume: 0.00
Jan. 30, 2023 1:04p
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/zigman2/quotes/211347112/realtime
add Add to watchlist BX:TMBMKDE-10Y
BX : Tullett Prebon
2.32
+0.08 +3.35%
Volume: 0.00
Jan. 30, 2023 6:04p
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/zigman2/quotes/211347051/realtime
add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
3.55
+0.06 +1.81%
Volume: 0.00
Jan. 30, 2023 1:04p
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/zigman2/quotes/203042512/composite
US : U.S.: NYSE
$ 13.35
-0.08 -0.63%
Volume: 1.55M
Jan. 30, 2023 1:03p
P/E Ratio
7.14
Dividend Yield
1.57%
Market Cap
$27.62 billion
Rev. per Employee
$445,559
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/zigman2/quotes/206663756/delayed
FR : France: Euronext Paris
26.62
+0.02 +0.06%
Volume: 3.10M
Jan. 30, 2023 5:35p
P/E Ratio
8.98
Dividend Yield
6.20%
Market Cap
€20.64 billion
Rev. per Employee
€252,098
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/zigman2/quotes/209264506/delayed
FR : France: Euronext Paris
10.94
-0.01 -0.13%
Volume: 5.44M
Jan. 30, 2023 5:35p
P/E Ratio
6.59
Dividend Yield
9.60%
Market Cap
€31.22 billion
Rev. per Employee
€670,879
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/zigman2/quotes/208934945/delayed
UK : U.K.: London
6,318.00 p
+27.00 +0.43%
Volume: 1.46M
Jan. 30, 2023 4:35p
P/E Ratio
7.73
Dividend Yield
8.36%
Market Cap
£106.54 billion
Rev. per Employee
£917,806
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/zigman2/quotes/202627887/composite
US : U.S.: NYSE
$ 79.42
-0.19 -0.24%
Volume: 1.55M
Jan. 30, 2023 1:04p
P/E Ratio
7.29
Dividend Yield
8.59%
Market Cap
$130.48 billion
Rev. per Employee
$1.23M
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/zigman2/quotes/201400686/delayed
UK : U.K.: London
549.20 p
+1.00 +0.18%
Volume: 17.90M
Jan. 30, 2023 4:35p
P/E Ratio
6.04
Dividend Yield
3.83%
Market Cap
£69.78 billion
Rev. per Employee
£1.36M
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/zigman2/quotes/203048482/delayed
UK : U.K.: London
10,710.00 p
+88.00 +0.83%
Volume: 1.50M
Jan. 30, 2023 4:35p
P/E Ratio
97.65
Dividend Yield
2.07%
Market Cap
£164.62 billion
Rev. per Employee
£426,154
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/zigman2/quotes/200304487/composite
US : U.S.: Nasdaq
$ 65.93
+0.40 +0.61%
Volume: 3.19M
Jan. 30, 2023 1:04p
P/E Ratio
101.06
Dividend Yield
2.15%
Market Cap
$203.43 billion
Rev. per Employee
$544,657
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HU : Hungary: Budapest
Ft 21,770.00
+240.00 +1.11%
Volume: 14.00
Jan. 26, 2023 12:00a
P/E Ratio
12.38
Dividend Yield
N/A
Market Cap
Ft21329.70 billion
Rev. per Employee
Ft189.56M
loading...
/zigman2/quotes/201350549/delayed
FR : France: Euronext Paris
798.80
-2.20 -0.27%
Volume: 296,812
Jan. 30, 2023 5:35p
P/E Ratio
28.50
Dividend Yield
1.50%
Market Cap
€402.33 billion
Rev. per Employee
€450,813
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