LONDON: European stock markets rose Tuesday following losses in Asia as traders weighed strong earnings news against the potential impact of Covid’s Delta variant on the economic recovery.
Oil prices rebounded but did not make much of a dent in Monday’s sharp losses, as the reimposition of lockdowns and other restrictions in several countries including China raised demand concerns.
The dollar dropped against its main rivals looking ahead to key US jobs data later in the week.
While corporate earnings continue to impress — with BP and car giant Stellantis posting bumper profits Tuesday — trader optimism has taken a knock after a series of below-forecast readings from the world’s biggest economies.
London’s benchmark FTSE 100 index was up around half-a-percent in midday deals, “led by BP swinging back into profit”, noted Russ Mould, investment director at AJ Bell.
However a surge in Covid cases across economic powerhouse China had added to worries on trading floors.
“The rise in US cases, and (Southeast Asia’s) situation, is well known, but what is spooking markets is China,” said OANDA’s Jeffrey Halley.
“It’s not a huge reach to extrapolate even more supply chain disruptions, especially if it proves as elusive to control for Chinese authorities as it has to officials globally.”
Hong Kong and Shanghai also continue to be buffeted by uncertainty caused by China’s crackdown on the tech, private tuition and property sectors, which has raised worries that officials will target other industries.
Gaming firms appeared to be next in the crosshairs after a state-run media commentary described online games as “spiritual opium”.
“Fears over Chinese regulatory interference aren’t going away, with Tencent the latest stock to slump on chatter about Beijing seeking to wield its power,” added analyst Mould.
News that Hong Kong was to ease travel restrictions, which could provide a boost to the fragile economy, was unable to stop the city’s Hang Seng Index from suffering another drop.
But Indian markets hit fresh all-time highs spurred by hopes of an economic rebound in Asia’s third-biggest economy.
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