Europe: Defensive, technology stocks power markets to record close

[BENGALURU] European stocks reached a record high after healthcare, utilities and technology gains outweighed declines triggered by a fall in commodity prices earlier on Monday.

The pan-European Stoxx 600 index rose 0.2 per cent to a closing high of 470.68 points, powered by rises in the defensive sectors of utilities and healthcare.

Technology stocks rose 0.5 per cent, led by a 4.5 per cent jump in British food delivery company Deliveroo after Germany's Delivery Hero took a 5.1 per cent stake in it.

Oil majors Royal Dutch Shell, BP and TotalEnergies slipped about 1 per cent each as crude prices fell more than 2.5 per cent on fears that pandemic-led curbs in Asia, particularly China, would dent fuel demand.

Miners also fell on weaker metal prices after data showed China's export growth unexpectedly slowed in July.

"Oil remains under pressure, but while there might well be some Delta variant fears driving the move, the fact that equities have remained broadly calm points towards an odd disconnect," said Chris Beauchamp, chief market analyst at IG.

"Either equities are blithely ignoring a major worry, or oil prices are undergoing a self-contained selloff that is being driven chiefly by supply concerns." The Stoxx 600 capped its best week since mid-March on Friday, on the back of a flurry of dealmaking and strong earnings. Volumes are expected to thin as many traders head for summer holidays.

Of the 70 per cent of the Stoxx 600 companies that have reported so far, 68 per cent have topped analysts' profit estimates, Refinitiv IBES data shows. Only 51 per cent beat expectations in a typical quarter.

Investors will be keenly watching US inflation data this week to see if the numbers make a case for an early tapering announcement by the Federal Reserve, the odds of which were cemented after a strong jobs report on Friday.

Vectura rose 5.5 per cent after US tobacco company Philip Morris raised its bid for the British drugmaker.

Among decliners, Hargreaves Lansdown fell 11.3 per cent even after posting higher annual underlying earnings as Britain's biggest fund supermarket said it did not expect equity trading volumes to remain at high levels.

HeidelbergCement, the world's second-largest cement maker, fell 2.9 per cent after Barclays downgraded the stock to "underweight", citing muted earnings growth due to inflationary pressures.

REUTERS