European stocks staged a relief rally on Tuesday, a day after cracking on the Covid outbreak in China and rising interest rates in the United States.
Wall Street did not follow Monday’s gains, with all three major markets slipping lower ahead of results from Google-parent Alphabet and Microsoft.
Europe’s single currency hit a two-year low against the dollar, which was boosted by its safe-haven status amid turmoil in Ukraine.
Global oil prices rebounded from recent losses on fears of weaker Chinese demand.
– ‘Relief rally’ –
“European markets are enjoying a modest rebound of relief… after Monday’s strong selloff, boosted by positive momentum at the US close last night,” said Victoria Scholar, chief investment officer at Interactive Investor.
London’s benchmark FTSE 100 index rose 0.7% in overall afternoon trading, although shares of HSBC bank slid 4.5% following the announcement of lower profits in the first quarter.
Frankfurt and Paris also gained 0.7% in afternoon trading.
Asian indices diverged as investors struggled to recover from Monday’s global rout, but fears lingered over China’s Covid lockdowns and the US Federal Reserve’s rate hike plan.
Omicron’s outbreak across China has led authorities to impose strict lockdowns in its biggest cities, locking down millions and threatening to deliver a hammer blow to the world’s second-largest economy.
Hong Kong shares edged higher but made only a small dent in the massive losses suffered the previous day, while Shanghai extended the previous day’s losses by more than 5%.
Sentiment eased somewhat after the People’s Bank of China pledged to stimulate growth and consumption.
China’s Covid measures have dealt a severe blow to its economy, raising concerns about the ripple effects for the rest of the world – given its reliance on Chinese-made products.
– ‘Wait and watch –
The Chinese crisis comes as traders grapple with a hawkish Fed, which is struggling to control inflation that is at its highest level in more than 40 years.
U.S. central bank policymakers have said they want to raise rates several times this year to rein in prices, with boss Jerome Powell indicating a half-point hike next month, followed by more before January.
Added to the picture, the war in Ukraine has triggered additional turmoil in the markets due to the impact on commodity prices and inflation.
While Wall Street took a shot in the arm from Elon Musk’s vast $44 billion (41 billion euros) agreed purchase of Twitter on Monday, the momentum didn’t continue until Tuesday.
The Dow was down 0.8% at the open, with the tech-heavy S&P 500 and Nasdaq Composite also falling ahead of earnings from Google-owner Alphabet and Microsoft.
The decline “reflects a wait-and-see attitude to these reports and a wait-and-see outlook on whether there will be a follow-up to yesterday’s rebound effort,” market analyst Patrick J. O’Hare said at Briefing. .com.
He said investors’ inability to react positively to data showing a March rebound in U.S. durable goods orders was “another indication that market participants have doubts about the persistence of stronger economic activity.” strong in the face of clear obstacles to growth like hawkish central banks and the continued supply chain pressures that have been felt with China’s lockdowns.”
– Key figures at 1:30 p.m. GMT –
London – FTSE 100: UP 0.7% to 7,428.56 points
Paris – CAC 40: +0.7% to 6,492.95
Frankfurt – DAX: UP 0.7% to 14,022.43
EURO STOXX 50: UP 0.5% to 3,777.63
New York – Dow Jones: DOWN 0.8% to 33,777.46
Tokyo – Nikkei 225: 0.4% higher at 26,700.11 (close)
Hong Kong – Hang Seng Index: UP 0.3% to 19,934.71 (close)
Shanghai – Composite: DOWN 1.4% to 2,886.43 (close)
North Sea Brent Crude: DOWN 0. percent to $102. per barrel
West Texas Intermediate: DOWN 0. percent to $98. per barrel
Euro/dollar: DOWN to $1.0678 from $1.0713 late Monday
Pound/dollar: DOWN to $1.2675 vs. $1.2741
Euro/pound: UP at 84.26 pence against 84.08 pence
Dollar/yen: UP to 127.23 yen from 128.14 yen