European stocks close higher for the fourth day in a row; US inflation data is assessed
The European stock market ended Tuesday slightly higher, with investors assessing mixed corporate results and the fading of positive momentum fuelled by a soft U.S. reading on inflation, along with a truce between the Sino-U.S. Trade spat.
The STOXX 600 index, which covers the entire continent, closed at 0.1%, its highest level since March. This is its fourth session in a row of gains.
After a weaker-than-expected performance, the index reached a new session high
Inflation reading
The report was positive in the U.S. but caution was warranted as it did not yet capture the impact that President Donald Trump’s tariffs had on the economy.
"We have a situation in which everyone assumes that what we are seeing now is not going to be what we will see in a few months," said Danni H. Hewson.
Investors will take this report with a grain of salt.
The global stock market surged Monday, after Beijing and Washington agreed on a 90-day suspension of most tariffs they imposed each other in April. This was a relief for investors who were worried that the trade war would cause a recession.
The European stock market has recovered most of the losses caused by Trump's massive import tariffs in July, but worries about higher levies impacting global growth remain.
Hewson said that after the initial euphoria, investors now look at the fine print to understand that even though the tariffs have been paused for 90 days, they are still higher than they were at year's beginning.
The Euro STOXX Volatility Index reached its lowest level in 11 weeks.
The focus was also on earnings. Bayer rose 2.8% following a lower decline in adjusted first-quarter earnings than was expected by the market.
Munich Re and Hannover Re are the two largest German reinsurers. They have reported sharp drops in their first-quarter profits after receiving a total of 1.7 billion euro ($1.9 billion) worth of claims related to Los Angeles wildfires.
Insurance sector index fell by 1.2%.
According to the latest LSEG IBES figures, European companies will report a 1.9% rise in their first-quarter earnings compared to a 0.4% growth seen a week earlier.
Vestas, a renewable energy company, soared by 9.2% to become the largest gainer in the STOXX 600. Traders said that draft proposals from U.S. legislators seeking to repeal certain lucrative climate measures are not as bad as they feared.
Portugal's EDP Renovaveis rose 7.5%, while Spain's Acciona Energy added 5.4%. (Reporting and editing by Eileen Soreng and Mrigank Dahniwala in Bengaluru.
(source: Reuters)
