Stellar mining rally helps European stocks offset losses

The graphic of the German share index DAX is pictured on the stock exchange in Frankfurt, Germany, 8 October 2021. REUTERS / employees

  • Commodity stocks rise; Mining index up 3%
  • Collective negotiations raise banks
  • ASOS collapses over profit warning

Oct 11 (Reuters) – A strong rally in mining stocks on Monday boosted an index of European stocks that has tracked all of the losses early in the session on inflation concerns and the upcoming earnings season.

The European Mining Sector (.SXPP) rose 3%, posting its biggest daily gain in three months as iron ore and coking coal rose on supply fears while base metals rose on worries about rising energy and raw material costs.

When a global energy crisis spiked crude oil prices, oil stocks (.SXEP) rose more than 1%, as did auto stocks (.SXAP), reducing losses in travel and leisure (.SXTP), utilities (.SX6P) and retail (. SXRP ) Names.

The pan-European STOXX 600 Index (.STOXX) made up for losses of up to 0.6% over the course of the day and closed slightly higher. A strong presence of commodity-related companies led to an outperformance of the London-based FTSE 100 (.FTSE) with an increase of 0.7%.

“Inflation will remain high longer than we expected due to rising energy prices and shortages of goods. The energy boost will be reversed next year due to base effects and lower oil and gas prices,” said the Global Economics team at Capital Economics.

“The shortage of goods is worsening and will continue for some time … This pressure should ease over the next year.

With third quarter results slated to begin this week, investors fear rising energy costs will weigh on corporate earnings. According to IBES data from Refinitiv, earnings growth for US companies is expected to have increased by 29.6% and for European companies by 45.6%.

The banking index (.SX7P) hit its highest level since February 2020, making up almost all of the losses caused by a pandemic as investors drove up interest rate expectations. The money markets are pricing in a rate hike by the European Central Bank of 10 basis points by the end of next year.

UK banks HSBC (HSBA.L), Lloyds Banking Group (LLOY.L) and Natwest Group (NWG.L) all gained more than 2% after aggressive comments from Bank of England officials about betting more on a rate hike in November. Continue reading

European banks recover almost all pandemic-related losses

In stocks, UK online fashion retailer ASOS (ASOS.L) slumped 13.4% after warning that higher logistics costs and a supply chain disruption could cut profits by more than 40% in 2022, Chief said Executive Nick Beighton will resign. Continue reading

German real estate investor Adler Group (ADJ.DE) lost 2.5% after agreeing to sell residential and commercial properties worth 1.49 billion euros (1.73 billion US dollars) to competitor LEG Immobilien ( LEGn.DE) for sale.

Reporting by Sruthi Shankar and Anisha Sircar in Bengaluru; Editing by Sriraj Kalluvila and David Gregorio

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