Europe’s main index hovered near pre-pandemic highs on Wednesday, as a rise in shares of Adidas after an upbeat sales forecast and gains in telecoms stocks outweighed losses in mining and travel sectors.
The pan-European STOXX 600 index edged 0.2% higher after a rally in technology stocks on Tuesday pushed the benchmark to its highest level since February 2020.
Miners, retailers, and travel and leisure companies led the declines in Europe, while telecoms jumped 1.0%.
German sportswear maker Adidas AG jumped 3.4% after it forecast a strong rebound in sales in 2021, particularly in China, the rest of Asia and Latin America following fourth-quarter results.
European markets recorded a strong start to March, with the German DAX hitting an all-time high as investors snapped up so-called cyclical stocks like banks and oil firms on hopes of a strong economic rebound from the coronavirus crisis.
However, trading has been volatile in recent weeks as government bond yields rose on concerns that central banks could begin tightening monetary policy as global economy recovers, raising borrowing costs.
“For the time being, these big intraday and day-by-day moves are probably to be expected until we see what inflation does genuinely look like after the recovery takes hold,” said Edward Park, chief investment officer at Brooks Macdonald.
Feeding into worries about fast price rises, data showed China’s factory gate prices rose at the fastest pace since November 2018 in February.
“The question there is whether Chinese factories start passing on the increase in prices to global customers. You could have inflation being stoked from China, and coming on to the rest of the world,” Park said.
Wall Street futures held steady ahead of key U.S. inflation data due at 1330 GMT and debt auctions that could help gauge the bond market’s trajectory.
Boosting telecom sector, Deutsche Telekom rose 3% after Citigroup upgraded the stock to “buy” from “hold”, saying the company has a solid position across all its market segments.
Just Eat Takeaway.com rose 1.8% after the food-ordering company said it expected further growth in 2021.
Zara-owner Inditex slipped 1.3% after it reported a 70% fall in 2020 net profit as a year of global lockdowns kept many of its shops shut.
-Reuters