European stocks claw back some losses, helped by miners, UBS

The German share price index DAX graph is pictured at the stock exchange in Frankfurt
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, July 19, 2021. REUTERS/Staff

July 20, 2021

By Sruthi Shankar

(Reuters) – European stocks stabilised on Tuesday after their worst sell-off this year in the previous session, helped by a handful of positive corporate earnings and production updates from miners.

The pan-European STOXX 600 index rose 0.5%, after worries about the fast-spreading coronavirus Delta variant and slowing economic growth had knocked 2.3% off the index on Monday.

Miners, among sectors that bore the brunt of Monday’s bruising selloff, rose 1.2% after BHP Group and Anglo American provided upbeat production numbers.

Swiss bank UBS climbed 4.0% after it posted a 63% jump in second-quarter net profit, helped by a booming wealth management business. Peers Credit Suisse and Julius Baer also rose.

“Although the U.S. economy is in a slowdown phase and we expect European growth to peak this summer, we continue to favour risk assets over a 12-month horizon,” analysts at BCA Research wrote in a note.

“The UK is a case in point — broad-based vaccinations are keeping hospitalisation rates there low despite the sharp jump in COVID-19 infections. Thus, the market impact of the Delta variant may ultimately prove fleeting in developed economies.”

British airline easyJet gained 1.9% after saying it plans to fly 60% of its pre-pandemic capacity in the July-September period.

Europe’s travel & leisure index has fallen sharply from its April record highs, with travel-related stocks getting hit by soaring infections across the continent and last-minute changes to travel rules.

The U.S. government on Monday issued the highest warning against travel to Britain.

Graphic: Europe’s travel % leisure index drops 17% since April peak – https://fingfx.thomsonreuters.com/gfx/mkt/klpykeeqqpg/Pasted%20image%201626770849236.png

Among other stocks, Norwegian telecoms operator Telenor rose 2.3% after it raised its full-year revenue outlook.

French spirits group Remy Cointreau inched down 2.2% even as its first-quarter organic sales more than doubled after bars and restaurants reopened in Europe.

Analysts expect profit at STOX 600 companies to jump 108.6% in the second quarter versus a year ago, according to Refinitiv IBES estimates, as COVID-19 restrictions eased across Europe.

Sweden’s AB Volvo fell 3.5% as it warned of further production disruptions and stoppages this year due to chip shortages.

Home appliances maker Electrolux tumbled 9.4% after it reported a lower-than-expected second-quarter operating profit and warned global supply chain woes would worsen in coming months.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur, Uttaresh.V and Alex Richardson)