European markets climb as traders look to benefit from recent dips
European stock markets staged a small recovery on Tuesday, attempting to regain ground after slumping in the previous session.
In London, the FTSE 100 (^FTSE) rose 0.6% on the day, undoing some of the losses on Monday sparked by housebuilders, while the CAC (^FCHI) climbed 0.9% in Paris, and the DAX (^GDAXI) was 1.1% higher in Frankfurt.
Travel and leisure and technology stocks edged up to the top of the basket, while all sectors were in the green. As well as equities, oil was higher on the back of firmer risk appetite after a challenging start to the year.
“The FTSE 100 was somewhat held back over recent times by its perceived exposure to mature, cyclical stocks, as opposed to growth stocks such as technology,” said Richard Hunter of Interactive Investor.
“This has resulted in some form of defence in the early part of this year, mirroring global rotation trends and also being helped along by a rising oil price, which has given a tailwind to the majors.
“There has also been something of a revival in fortunes for bank stocks, based on both a more supportive rising interest rate environment as well as a reset of share prices following a prolonged period of undervaluation.”
It came as the British Retail Consortium (BRC) warned of a storm ahead, with consumer spending under threat from rising inflation, soaring energy bills and April’s National Insurance hike.
Total retail sales rose by 2.1% during the key month of December, compared with a year earlier, and were up by 4.6% compared with 2019, before the pandemic struck.
Read more: UK retailers face struggle in year ahead despite recent festive cheer
Elsewhere, inflation across the OECD area hit its highest level in 25 years, as consumers face a cost of living squeeze.
Consumer prices in the 38 countries which make up the OECD surged to 5.8% per year in November, the highest since May 1996.
Across the pond, the S&P 500 (^GSPC) managed to reverse earlier losses to rise 0.2% at the time of the European close, and the tech-heavy Nasdaq (^IXIC) gained 0.8%. The Dow Jones (^DJI) slipped 0.1% lower.
The downbeat mood came after Wall Street managed a late recovery last night, after the tech-heavy Nasdaq Composite dipped to a 10-week low into correction territory, 10% off its record high, ahead of Wednesday’s US inflation report.
Of the six trading days so far of 2022 the Nasdaq has declined for four of them, although it was able to finish slightly higher during the last session, as buying interest started to come back in.
US consumer inflation data on Wednesday is expected to show that the headline CPI has hit 7% which would open the door for the Federal Reserve pressing on with its tightening cycle.
Watch: What is inflation and why is it important?
Meanwhile, Asian shares mostly declined in cautious trading on Tuesday.
Investors are keeping an eye on rising numbers of COVID-19 cases, especially in China, where a third city has locked down its residents because of a fresh outbreak.
This has raised the number confined to their homes in the country to about 20 million people, with the Winter Olympics just weeks away.
In Japan, the Nikkei (^N225) fell 0.9% while the Hang Seng (^HSI) was marginally lower and the Shanghai Composite (000001.SS) shed 0.7%.