BRUSSELS, May 12 — European stocks steadied today after their worst selloff this year as strong earnings reports and signs of a speedy economic recovery offset concerns about a rapid rise in prices.
The pan-European STOXX 600 index rose 0.2 per cent after falling almost 2 per cent on Tuesday as investors offloaded riskier assets on worries that rising US inflation could lead to tighter monetary policy.
Ample liquidity, a global semiconductor shortage and a recent rally in commodity prices are adding to fears of inflation as developed economies gradually reopen after lockdowns.
All eyes will be on US consumer price data for April that is due later in the day, with analysts expecting a 3.6 per cent lift in year-on-year prices, boosted by last April’s low base.
“We suspect that the market knows about it, and is positioned for it,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets.
“What we’re not going to get an answer for and is really crucial is whether this increase in prices is transitory as the Fed is telling us or is it something more persistent that market is worried about.”
UK’s blue-chip FTSE 100 outperformed as data showed Britain’s economy grew by a stronger-than-expected 2.1 per cent in March from February.
Miners provided the biggest boost, with shares of Glencore, Anglo American and Rio Tinto gaining about a per cent each as commodity prices continued to rally.
“We have a kind of central bank-sanctioned rally in commodities because they want the economy to run hot. That is great for industrials and materials and those stocks will continue to do well,” added Veitmane.
European earnings are now expected to surge 90.2 per cent in the first quarter, as per Refinitiv IBES data, up from a forecast of 83.1 per cent growth last week.
German lender Commerzbank jumped 7.6 per cent after it beat expectations for first-quarter profit and raised its revenue outlook.
Spirits maker Diageo rose 3.2 per cent on restarting its capital return program, while Amsterdam-based technology investor Prosus NV gained 1.8 per cent after plans to acquire up to 45.4 per cent of shares in its parent Naspers.
French video games company Ubisoft fell 7.7 per cent after it warned operating profit might fall this financial year. — Reuters
