(Reuters) -European stocks inched to new highs on Monday as optimism about the reopening of economies and easy monetary policy lifted sectors that typically benefit from a recovery.
The pan-European STOXX 600 index rose 0.1% to hit a fresh all-time high, with miners rallying 2.6% to a 10-year-high on the back of strong commodity prices.
UK-listed miners such as Rio Tinto, BHP Group and Glencore rose almost 3%. China’s benchmark iron ore futures surged 10% to a record high, steel prices rose 6% and copper prices touched record highs on hopes for improved demand amid tightening supply. [MET/L] [IRONORE/]
“The boom in commodity prices is good news for the materials or the cyclical sectors,” said Rupert Thompson, chief investment officer at Kingswood Group in London.
“It cements the idea that you’ve got further rotation towards value and commodity sectors. But on the other hand, you’ve got the clear risk that it does exacerbate worries about inflation.”
Investors will be focussing on U.S. inflation data later this week to gauge if a strong rise in prices will drive the Federal Reserve to change its policy stance. A far weaker-than-expected U.S. jobs data on Friday boosted hopes that interest rates will remain lower for longer.
UK’s commodity-heavy FTSE 100 rose 0.2% despite a surge in the pound, with British Prime Minister Boris Johnson set to announce the next phase of reopening from the COVID-19 lockdown.
British Airways-owner IAG, easyJet and Wizz Air, however, fell between 2% and 3% after UK allowed international travel to resume from May 17, but just 12 countries made the so-called “green list”.
The wider travel and leisure sector declined 1.3%, with highly valued technology stocks dropping 1.0%.
The earnings season entered the home stretch, with about two-thirds of STOXX 600 companies having reported their first-quarter results. About three-quarters of those companies have topped profit estimates, as per Refinitiv IBES data.
German biotech company BioNTech surged 9.6% after revealing plans to build a new manufacturing site for its vaccines based on messenger RNA technology (mRNA) in Singapore.
French lender Societe Generale rose 2.3% on plans to pare back risk exposure in its global markets business and focus more on financing and advising on deals.
British bakery and fast-food chain Greggs jumped 9% as it raised its profit outlook after a strong recovery in sales following the easing of COVID-19 restrictions.
Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D’Silva and Saumyadeb Chakrabarty
