Commodity stocks keep Europe buoyant as Russia gas supply concerns linger
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, April 26, 2022. REUTERS/Staff
Summary
Summary Companies Mining sector jumps 4.5%
German consumer morale seen at historic low in May
Upbeat earnings lift Mercedes; Deutsche Bank, Aveva slide
Russia halts gas supplies to Poland, Bulgaria
April 27 (Reuters) – European shares broke a three-day losing streak on Wednesday as basic materials stocks surged 4.5%, while Russian energy giant Gazprom halting gas supplies to Bulgaria and Poland and a plunge in German consumer morale kept gains in check.
Exacerbating an energy crunch in Europe, Gazprom (GAZP.MM) halted gas supplies to Bulgaria and Poland for failing to pay for gas in roubles in the Kremlin’s toughest response so far to crippling sanctions from the West. read more
“The Russian gas export developments out of Europe are a reminder of the potential for an escalation of the war… (and)looms over this market in the near term,” said Mark Haefele, Chief Investment Officer, UBS Global Wealth Management.
Register now for FREE unlimited access to Reuters.com Register
“However, Europe still has many diplomatic and fiscal policy responses available to prevent an energy induced recession and based on current information, a European recession is not our base case.”
The pan-European STOXX 600 (.STOXX) rose 0.7% after having hit six-week lows at the open. Miners (.SXPP) and oil stocks (.SXEP) extended gains for a second straight day, with the former on course to make back all of Monday’s 6% plunge.
German shares (.GDAXI), which underperformed through the session, rallied at close. Deutsche Bank’s (DBKGn.DE) 5.6% slide after warning that the Russia-Ukraine conflict could hurt full-year results, capped gains. read more
A survey showed German consumer morale is set to plunge to a historic low in May as the conflict in Ukraine leads to soaring costs and dashes hopes of a post-pandemic recovery. read more
“With so many stumbling blocks in the coming weeks, uncertainty and volatility will remain elevated with the potential for lagging FX and equity volatility to gain momentum,” strategists at TS Lombard warned.
German consumer confidence
Concerns around slowing economic growth, inflation and the events in Ukraine, coupled with the prospect of aggressive monetary policy tightening by major central banks have sapped risk appetite, putting the benchmark STOXX 600 index on track to end the month about 3% lower despite some upbeat earnings.
First-quarter earnings for companies listed on the STOXX 600 are expected to increase 27.1% over the same period last year, according to Refinitiv estimates. Of the 37 companies that reported results as of Tuesday, 62.2% have exceeded analyst estimates, per Refinitiv data.
Mercedes-Benz (MBGn.DE) and HelloFresh (HFGG.DE) rose on upbeat earnings, while industrial software company Aveva (AVV.L) dropped 15.9% to the bottom of STOXX 600 after it said sanctions on Russia would hit its operating profit this year.
Register now for FREE unlimited access to Reuters.com Register
Reporting by Anisha Sircar and Susan Mathew in Bengaluru; Editing by Shounak Dasgupta and Shailesh Kuber
Our Standards: The Thomson Reuters Trust Principles.
