© Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 29, 2021. REUTERS/Staff
By Anisha Sircar and Ambar Warrick
(Reuters) -European stocks finished at record highs on Monday, carrying over momentum from October’s gains on the back of strong earnings and as expectations of interest rate hikes supported bank stocks.
The pan-European closed up 0.7% at a record high of 478.87 points, boosted by a 1.4% jump in bank stocks, as euro zone bond yields surged on expectations of rate hikes by the European Central Bank (ECB) next year. [GVD/EUR]
The bank sector touched its highest level in more than two years, and was the best performer for the day.
The bank-heavy Italian and Spanish indexes rose 1.2% and 1.4%, respectively, while the German added 0.8%.
“There’s a lot of earnings optimism, the feel-good factor of companies bouncing back,” said David Madden, markets analyst at Equiti Capital.
“We spent so much time being afraid of the tapering in September and early October. I think people are now going to see tapering as a positive sign, that you can completely come full circle.”
The STOXX 600 in October recorded its best month in seven with a 4.6% rise, driven by a slew of strong earnings. Refinitiv data last week showed that third quarter earnings in the STOXX 600 are expected to jump 52% from last year.
Investors are now awaiting signals from the U.S. Federal Reserve this week, particularly on when the bank intends to begin tapering pandemic-era stimulus measures.
Among individual stocks, shares in German conglomerate Thyssenkrupp (DE:) and steelmaker Salzgitter rose 2.4% and 1.9%, respectively, after the U.S. and the European Union ended a dispute over steel and aluminium tariffs.
French drugmaker Sanofi (NASDAQ:) gained 2.2% after HSBC upgraded the stock to “buy”.
Volkswagen (DE:) inched up 0.4% after saying its Skoda Auto would resume production on Sunday following a two-week outage caused by the chip crisis.
100 rose 0.6%. Barclays (LON:) dipped 1.6% after it said Chief Executive Officer Jes Staley will stand down following regulators’ investigations into his ties with convicted sex offender Jeffrey Epstein.
Pandora (OTC:) fell 1.2% after an earnings update from the world’s largest jewellery maker showed weak sales growth at its own stores in the third quarter.
Budget airline operator Ryanair rose 1.2% after it reported its first quarterly profit since before COVID-19. But gains in the stock were stifled as the firm downgraded its annual forecast to a loss.
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Oil Prices Fall amid Protests in China
Oil prices fell on Monday amid a general decline in investor appetite for risk amid information about the ongoing protests in China against vested restrictions.
The cost of January futures on Brent crude oil on London’s ICE Futures exchange was $81.31 per barrel on Monday, down $2.32 (2.77%) from the close of the previous session. At the close of trading on Friday, those contracts fell $1.71 per barrel to $83.63.
Oil prices decline – what’s going on in the market?
The price of WTI futures for January crude fell by $2.31 (3.03%) to $73.97 per barrel in electronic trading on the New York Mercantile Exchange (NYMEX). By closing of previous trades, the cost of these contracts decreased by $1.66 (2.1%) to $76.28 per barrel. Brent and WTI gained 4.6% and 4.8%, respectively, last week.
According to Bloomberg, protests were held in cities across the country, including the capital Beijing, as well as Shanghai, Xinjiang, and Wuhan, which was originally the epicenter of the COVID-19 spread.
That contributes to a stronger U.S. dollar, which reduces the attractiveness of investments in crude, and also raises the possibility of even more significant tightening of restrictions by Chinese authorities, the agency said.
“The outlook for the oil market remains unfavorable and the events of this weekend in China do not add to the positive,” notes Warren Patterson, who is in charge of commodities strategy at ING Groep NV in Singapore.
According to the forecast of analytical company Kpler, oil demand in China in the fourth quarter will decrease to 15.11 million barrels per day (bpd) compared to 15.82 million bpd a year earlier.
Earlier we reported that Russia will ban the sale of its oil to countries that have imposed a price ceiling.
Oil Russia ban news: Russia will ban the sale of its oil to countries that have imposed a price ceiling
Will Russia sell oil to Europe? The administration of President Vladimir Putin is preparing an order prohibiting Russian companies and any trader from buying Russian oil to sell raw materials to countries and companies that have imposed a price ceiling on Moscow. Bloomberg news agency wrote this, citing a report from sources.
“The Kremlin is preparing a presidential decree banning Russian companies and any traders buying national oil from selling it to anyone who participates in the price ceiling,” the publication wrote.
According to the newspaper’s interlocutors, this would prohibit any mention of the price ceiling in contracts for Russian crude, as well as transferring it to countries that have joined the price ceiling for the natural resource.
In the first half of September, the press service of the US Treasury Department said that the USA, together with its allies from G7 (Great Britain, Germany, Italy, Canada, France and Japan) and the European Union (EU) would impose a ban on marine transportation of Russian oil on December 5 and oil products – on February 5.
Earlier we reported that EU negotiations on limiting the prices of Russian oil reached a deadlock today.
EU talks on restrictions on Russian crude oil prices today stalled
Negotiations between the European Union countries about the “ceiling” of Russian crude oil prices today reached an impasse; Bloomberg reported, according to its sources.
Representatives of the bloc cannot reach an agreement on the ceiling price of Russian oil. According to the agency, the proposed European Commission limit of $65-70 per barrel, Poland and the Baltic countries believe “too generous,” while Greece and Malta, which is actively engaged in transporting fuel, do not want the limit to fall below $ 70. Recall that the Russian response to the oil price cap was negative. The Russian government has officially said that it will only sell oil at market prices.
“We are looking for ways to make this solution work and we are trying to find a common ground to implement it in a perfectly pragmatic and efficient way, while avoiding that it may cause excessive inconvenience to the European Union,” said German Chancellor Olaf Scholz.
Earlier, we reported that the SEC fined Goldman Sachs $4 million for non-compliance with ESG fund principles.
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