European stocks pause near record high; Middle East, economic data in focus
The telecoms sector declined the most
Europe's benchmark Stoxx 600 index neared a record high on Monday, August 10, as investors paused before a week filled with economic data. The pan-European index stood at 660.45 points, with the energy sector driving gains, up 1.3 percent as oil prices climbed for a fourth consecutive session. Iran demanded the US meet certain conditions before reopening the Strait of Hormuz, signaling progress towards an agreement with Oman on new shipping lanes through the vital waterway.
Markets were in a state of digestion and wait-and-see, according to Kiran Ganesh, UBS' managing director of global investment communications. Investors were also keeping an eye on euro zone employment data and US consumer price figures due later in the week, which could provide insights into potential interest rate changes. Strong corporate earnings on both sides of the Atlantic, coupled with softer-than-expected US jobs data last week, helped the Stoxx 600 climb 1.7 percent to a record high on Friday.
Analysts noted that corporate earnings, despite factors like the Middle East crisis, tariffs, and chip prices, were not hindering companies' performance. Basic resources rose 0.9 percent, following higher copper and precious metal prices, while technology shares increased 0.3 percent. Meanwhile, telecoms experienced the steepest decline, with Deutsche Telekom and Vodafone dropping 3.2 percent and 3.1 percent, respectively.
Media stocks also fell 1.6 percent, with WPP losing 5 percent and Publicis Group shedding 1.4 percent.
Looking ahead, second-quarter Stoxx 600 earnings are expected to rise nearly 21 percent, up from earlier projections of around 12.5 percent in May. Plus500 gained 2.1 percent after reporting higher half-year core profit, driven by increased trading activity due to expansion in the US and new product offerings. However, some companies faced setbacks, with Vistry dropping 12.2 percent following reports that credit insurer Allianz was reducing coverage for the affordable homebuilder's suppliers by up to 70 percent.
Coca-Cola HBC also saw a 4.8 percent decline after BNP Paribas lowered its rating on the bottler to "neutral" from "outperform."
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