European Stocks Mostly Higher Thursday After UK GDP Surge; COVID-19 Delta Variant Worries Linger
European stocks closed mostly higher Thursday as upbeat UK economic data countered worries over the recent rise in worldwide COVID-19 infections tied to the delta variant of pandemic virus.
UK’s GDP grew 4.8% in the second quarter, the fastest growth rate in the G7, powered by a surge in food and accomodation spending following the lifting of pandemic restrictions, official data showed. The UK economy contracted 1.6% in the first quarter. The Q2 rebound in line with analyst expectation left UK GDP 4.4% below output in the fourth quarter of 2019, the Office for National Statistics said.
On a monthly basis, UK GDP rose 1% in June, marking its fifth consecutive month of growth, compared with the downwardly revised 0.6% rise posted a month earlier. The gain exceeded market expectations for a 0.8% monthly increase.
The services sector remained the biggest contributor to Britain’s economic recovery, showing growth of 1.5% in June and a 5.7% rise in the second quarter.
Meanwhile, the euro area’s seasonally adjusted industrial production dropped 0.3% in June following a 1.1% decline in May, Eurostat reported Thursday. Analysts expected a drop of 0.2%. Industrial production was up 9.7% year over year in June, versus market expectations for an annual gain of 10.4%.
On the corporate front, maritime shipper Hapag-Lloyd (HLAG.F) gained nearly 5% after raising its full-year guidance as profit surged amid strong shipping demand. Group profit attributable to shareholders for the first half of 2021 jumped to 2.72 billion euros ($3.19 billion), or 15.47 euros per share, from 278.7 million euros, or 1.59 euros per share, a year earlier.
Revenue for the first half rose to 8.75 billion euros from 6.36 billion euros a year earlier, driven by a higher average freight rate amid high demand and severe logistics bottlenecks.
Meanwhile, Scotland leader Nicola Sturgeon sent a letter to UK Prime Minister Boris Johnson asking him to review oil and gas licenses, including Shell’s (RDSA.L, RDSB.L) Cambo oil project, to address the climate challenge. Shell has a 30% stake in the project with operator Siccar Point Energy.
Sturgeon asked Johnson to increase the climate conditionality of approvals for offshore oil and gas projects in light of “severe threat and heightened risk the climate emergency poses to the planet,” quoting the conclusion of the scientific report earlier this week from the UN Intergovernmental Panel on Climate Change.