Yahoo Finance European markets end on high as tech stocks continue to divide opinions
European stock markets rallied on Monday as a bumper US jobs report continued to boost stock market sentiment and high oil prices led the FTSE 100 to climb 0.95%, closing at 7,587.03
The CAC (^FCHI) finished the session with gains of 0.90% and the DAX(^GDAXI) finished 0.85% higher.
US stocks opened higher Monday led by gains in tech as investors await more corporate earnings reports but ended up in the red during midday trading.
The S&P 500 (^GSPC) fell 0.30% and the tech-heavy Nasdaq (^IXIC) was dropped 0.45%. The Dow Jones (^DJI) was down 0.10%.
The better-than-expected non-farm payroll figures showed the US economy added 467,000 jobs in January, allaying fears of significant disruption from the Omicron variant.
It will be a busy week for corporate earnings and fresh economic data as investors continue to assess the Federal Reserve's path forward for monetary policy.
Peloton (PTON) jumped 24% after it was reported that the stationary-bike company was drawing interest from Amazon (AMZN) and other potential suitors.
The London benchmark edged up with banking stocks and mining companies leading the gains.
Lender HSBC (HSBA.L) was up 0.29% and global miners Anglo American (AAL.L) and Rio Tinto (RIO.L) were up 0.74% and 0.47% respectively.
Investment trust Scottish Mortgage (SMT.L), which invests in technology companies, was up 0.94%, following Friday’s tech sector rally.
The earnings season is set to continue as BP (BP.L), AstraZeneca (AZN), Unilever (ULVR.L) and GlaxoSmithKline (GSK.L) are among blue-chips reporting results this week.
“In the UK, the FTSE100 is maintaining its contrarian stance in terms of performance, as it continues to benefit inter alia from the strength of an oil price which has now risen by 20% in the year to date. In addition, the mature, cyclical and to some extent defensive nature of its components have also attracted renewed interest from investors given the turmoil being seen elsewhere," said Richard Hunter, head of markets at Interactive Investor.
Read more: UK consumer confidence hits seven-month high as COVID fears wane
"Whereas high growth stocks have felt the full force of investor rotation in anticipation of higher rates within an inflationary environment, these very factors have highlighted the attraction of certain stocks which display protection against inflation through strong pricing power."
It comes as surging global inflation resulted in the Bank of England last week hiking its main interest rate for a second meeting in a row, while the European Central Bank signalled for the first time that it may raise borrowing costs this year.
Crude oil prices jumped above $93 a barrel, the highest since October 2014. Brent crude (BZ=F) was trading at $93.25 a barrel this Monday as traders increasingly suspect demand is being underestimated as economies emerge from the pandemic.
“As we look ahead to the upcoming week, inflation expectations for the US economy are likely to encounter a new challenge with the release of US CPI [inflation] for January on Thursday, which is expected to rise,” said Michael Hewson, analyst at CMC Markets.
Craig Erlam, senior market analyst at OANDA, said: "The last couple of weeks has only elevated that as central banks have shifted into a higher gear and markets have continued to price in ever more tightening.
In the case of the ECB, a handbrake turn on interest rates has certainly not gone unnoticed and everyone will be clinging to their every word in the coming weeks ahead of the March meeting."
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Asian markets finished mixed as of the most recent closing prices. The Hang Seng (^HSI) gained 2.03% while the Nikkei 225 (^N225) fell 0.70% and the Shanghai Composite (000001.SS) lost 0.21%.
