European stocks see-sawed on Tuesday, with investors weighing concerns over inflation and monetary tightening against economic recovery hopes and lockdown news in the UK.
US stocks saw another sell-off, amid concerns over rising global bond yields. Rising hopes of an economic rebound amid vaccine rollouts have fuelled fears of an eventual rise in inflation, and an accompanying shift to tighter monetary policy.
The FTSE 100 (^FTSE) opened higher, fell 0.8% by mid-afternoon before closing 0.2% higher in London. HSBC had reported profits sliding by a third, though it also announced it would resume dividends.
It came after UK prime minister Boris Johnson unveiled a "roadmap" out of lockdown by as early as June for England on Monday, saying the "end is in sight." Cyclical stocks including hotels, airlines, banks, fashion retail and housebuilders made strong gains.
The CAC (^FCHI) in France remained close to flat most of the day, closing 0.2% higher. The DAX (^GDAXI) in Germany was 1.5% lower in mid-afternoon trading, but pared back losses to end the day down 0.6%.
Wall Street opened lower, and put further pressure on European stocks. The S&P 500 (^GSPC) was 1.2% lower in early trading, after a fifth day of declines on Monday. Analysts noted the last time it had seen such a negative run was a year ago during the major market upheaval triggered by the arrival of COVID-19 across the world.
Tech stocks took a beating on the Nasdaq (^IXIC), which saw declines of 2.8%. The tech-heavy index had slumped 2.5% on Monday, its worst day of the month. Meanwhile the Dow lost 0.7%.
Analysts said strong demand for commodities had re-fuelled the reflation trade, but it was not enough to counteract inflation concerns. Commodities hit seven-year highs on Monday, with Brent (BZ=F) gaining 3.7% and US benchmark crude prices up 3.8%. Copper prices also hit their highest level in almost a decade.
WATCH: Boris Johnson explains his four-step lockdown exit plan
Brent was trading 1.5% higher at $66.24 a barrel as European markets opened on Tuesday, while West Texas Intermediate (WTI) crude was up 0.3% to $61.69. The gains have lifted energy stocks, with Royal Dutch Shell (RDSB.L) up 2.3% and one of the fastest risers on the FTSE 100 on Tuesday.
"The strength in oil prices followed news of accelerating drawdowns of global inventories and improving demand conditions," wrote Deutsche Bank analyst Jim Reid in a note.
Stocks had wobbled overnight in Asia, but were boosted by commodity prices. Equities on MSCI's Asia-Pacific index excluding Japan had fallen to a two-week low in intra-day trading before advancing 0.4%. Japanese markets were closed for a holiday.
"Yesterday had more twists than your average Shakespearian drama in what was a pretty topsy-turvy day for global markets. Equities sold off again on the back of continued concerns over inflationary pressures," wrote Deutsche Bank analyst Jim Reid in a note.