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Europe close: Stocks rise as bond yields ease but analysts cautious

By Alexander Bueso

Date: Wednesday 06 Jul 2022

Europe close: Stocks rise as bond yields ease but analysts cautious

(Sharecast News) - European shares recouped some of the previous day's losses on Wednesday, although recession talk continued to make the rounds, prompting caution on the part of analysts.
"While stocks have avoided sustained falls after Tuesday's shaky session, the mood remains febrile," said IG chief market analyst Chris Beauchamp.

"The drop in the euro and weakness in yields shows that investors remain very nervous about the economic prospects of the global economy, and the opportunistic bargain hunting in stocks may not have much staying power."

The pan-European Stoxx 600 was up 1.66% at 407.34, with sentiment boosted by news that Norwegian oil and gas workers had called off their strike, easing worries of a supply shortage.

That news also pushed front-dated Brent crude oil down by 3.1% to $99.7 per barrel on the ICE. Natural gas futures however rose 9.4% to 174.5/MWh.

"It is increasingly hoped that lower oil prices, which would benefit both businesses as well as consumers, could lead to an adjustment of investment and spending patterns which would underpin a faltering economy," Interactive Investor head of markets Richard Hunter chipped-in.

Euro/dollar was again lower, shedding 0.90% to 1.0174 while longer-term sovereign bond yields in the euro area periphery were a tad lower.

In the background nevertheless, the release of a stronger-than-expected reading on US services sector activity for June from the ISM institute helped to steady investor sentiment.

Germany's DAX gained 1.56% to 12,594.52. Data showed German industrial orders grew surprisingly in May and were up by 0.1% on the month - together with positive revisions to prior months' figures - boosted entirely by orders from outside the Eurozone.

Nevertheless, according to Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics "they don't change the story of weakness in new orders midway through the second quarter."

In other economic news, eurozone retail sales volumes undershot economists' forecasts in May. According to Eurostat, in seasonally-adjusted terms, sales volumes grew at a month-on-month clip of 0.2% (Consensus: 0.5%).

Furthermore, April's outsized 1.3% drop in sales versus the previous month was revised down to -1.4%.

In equity news, Just Eat surged 16% after Amazon agreed to take a 2% stake in Grubhub and said it will offer its Prime members access to the service for one year.

Shares of Faurecia fell 6% after Barclays double-downgraded its rating on the French car parts maker' stock to "underweight".

Ryanair shares slipped despite a UBS upgrade to 'buy'.


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