European stocks bucked overnight losses on Wall Street and Asia to rally on Tuesday, with a positive update from UK baker Greggs giving investors some appetite.
The pan-European Stoxx 600 index gained 0.71% after losses on Monday. All major regional bourses were higher, despite a closely-followed survey showing supply constraints and cost rises were hitting business confidence in the euro zone.
Tech stocks were sold off overnight as investors got jittery over rising Treasury yields. Asian stocks fell on persistent worries about slowing growth in China.
Tech heavyweights Apple, Alphabet, Amazon and Microsoft all fell at least 2% while shares in Facebook slipped 4.9% after the social media platform and its WhatsApp and Instagram affiliates crashed for several hours due to technical issues.
“We’re at a point where the pessimism over the supply chain problems is probably nearing a peak, and expectations for growth have washed out,” said Neil Wilson at Markets.com.
“Likewise we may be at peak inflation/stagflation fears – the reopening is apace. Cyclicals/value are not doing enough to compensate for what amounts to a pretty sizeable pullback for the tech sector now, but there could be room for this area of the market to rally again as the economic situation starts to feel like it could pick up.”
In economic news, business growth in the euro zone during September held up, but was hit by ongoing supply-chain problems and increased inflationary pressures which show no sign of easing, a survey showed on Tuesday.
IHS Markit’s final composite Purchasing Managers’ Index (PMI), used as guide to gauge economic health, sank to 56.2 last month from 59.0 in August.
In equity news, Greggs – renowned for its range of sausage rolls – rose to the top of the Stoxx, gaining almost 10% after lifting full-year guidance on the back of a strong sales performance in the third quarter, although it also warned over inflationary pressures.
The company said two-year like-for-like sales were up 3.5% in the third quarter despite staffing and supply chain disruption. Shares in other food providers also rose, with HelloFresh, Deliveroo and Just East Takeaway all higher.
Infineon Technologies gained 1.9% after it confirmed its 2021 revenue and said it expects results to rise further next year as demand for power chips for cars, datacenters and renewable power generation soars.
Shares in Denmark’s GN Store Nord fell 5% as the firm cut its 2021 revenue growth forecast for its hearing aid unit to around 16% from 25% citing postponed product launches.
“GN Hearing is currently experiencing delays in product development deliverables leading to postponement of key product launches planned for H2 2021,” it said.
Aerospace and motoring engineer Melrose fell after saying it expected the global shortage of semi-conductors to hit its automotive division following a sharp rise in customer cancellations in the first quarter.
