European extended gains on Wednesday despite economic growth in the eurozone easing to a nine-month low in December as Covid took its toll.
The pan-regional Stoxx 600 index was up 0.14% as investors eyed higher US Treasury yields and the latest Federal Reserve minutes. All major continental bourses were higher.
“Rising Treasury yields in the US prompted a bout of rotation from high growth stocks, such as technology, into value, boosting financial and industrial shares,” said Interactive Investor head of markets Richard Hunter.
“In particular, interest rate sensitive stocks such as the banks attracted buying interest ahead of the imminent fourth quarter reporting season. Although it is extremely unlikely that rates will rise to historical levels, there is nonetheless an improvement in sentiment given that the impending environment should improve prospects for the banks over the coming months.”
“Minutes are due later from the latest Federal Reserve meeting in December, and will likely reveal the latest thinking on the need to curb stubbornly high inflation by tightening policy. As such, the current expectation is for an initial hike in March, which is part of the reason for rising yields.”
Meanwhile in Europe, IHS Markit’s final eurozone composite output index fell to 53.3 from 55.4 in November and from a flash estimate of 53.4.
The final services business activity index printed at 53.1 in December, down from 55.9 the month before and a flash reading of 53.3.
In equity news online supermarket Ocado topped the Stoxx after an upgrade to ‘buy’ from ‘hold’ at Berenberg and news from market research firm Kantar that it was the only internet grocer to grow its sales year-on-year over the key Christmas period.
Shares in Ocado’s joint venture partner Marks & Spencer were also higher.
Dutch tech investor Prosus, which has a stake in China’s Tencent, fell after a market regulator fined units of several Chinese tech firms for failing to properly report around 12 deals.
Shares in automaker Stellantis rose on news that its Chrysler brand was planning to shift to an all-electric lineup by 2028 and introduce new products, while German carmaker BMW gained as it achieved record sales of more than 2.2 million vehicles from its BMW marque in 2021.
