Europe: Banks, oil stocks lower despite record highs for Wall Street

[BENGALURU] European shares ended lower on Tuesday, with banking and energy stocks leading the losses on worries about escalating US-China tensions even as a tech-powered rally saw New York's S&P 500 hit an all-time high.

After hovering in the positive territory earlier in the session, the pan-European Stoxx 600 turned decidedly lower in afternoon trading. The index closed down 0.6 per cent, still 15 per cent below its record high.

On the other side of the Atlantic, the benchmark S&P 500 hit an intra-day high, recovering all its losses made since the onset of the coronavirus crisis in February, powered by a rally in Amazon, Apple and other tech-related companies.

"What we're seeing is some consolidation in European markets given that in the past two months, we're more or less trading sideways as opposed to the US where growth stocks have been lifting the overall market," said Matthias Bausch, senior cross asset strategist at Commerzbank. "Liquidity is more important than earnings growth at the moment, and we have record high money supply growth in the US and Europe."

However, markets globally failed to make headway after the Trump administration on Monday expanded its curbs on China's Huawei Technologies, in a further escalation of tensions between the world's two largest economies.

A lack of progress on the US stimulus front has also disappointed investors.

"The current stimulus stalemate persists, but a deal will get done before the end of next month because that is when federal funding runs out," noted Edward Moya, a senior market analyst at Oanda.

Banks and energy sectors were among the biggest drags on the Stoxx 600, down more than 1 per cent, with the latter hit a slide in oil prices.

In earnings-driven moves, UK-listed miner BHP Group fell 2.6 per cent as its annual profit fell 4 per cent, missing analysts' estimate, and it warned that most major economies except China will have to bear the brunt of a coronavirus-led downturn this year.

Danish jewellery maker Pandora tumbled 7.5 per cent as it expected sales to decline this year by up to one-fifth, despite having reopened nearly all its stores.

Britain's Marks & Spencer fell 4.9 per cent after it revealed plans to cut a further 7,000 jobs, dealing the latest blow to the beleaguered retail sector from the Covid-19 crisis.

Among the bright spots, British housebuilder Persimmon jumped 8.0 per cent after saying it would reinstate its dividend after an "excellent start" to the second half of the year.

REUTERS