European Stocks Push Higher as Investors Turn Optimistic

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Principal Points:

• Stocks across European bourses advanced broadly on Wednesday
• Investors ease inflation concerns and shift gears to pare losses after Tuesday rout

European Stocks Gain as Market Mood Improves

Bourses in Europe advanced on Wednesday as the broad market staged a comeback after the Tuesday rout. As a result, the pan-European Stoxx 600 added 0.6%, continuing the volatile performance from the past few days. In other words, the broad-based index was able to erase some of the 2.2% loss from Tuesday.

Investors have been largely seeking direction in stocks after major economic reports give mixed signals. With inflation at a multi-year high and concerns of a global economic slowdown, money managers struggle to figure out where the market is headed.

The winning theme in investing on Wednesday was healthcare. AstraZeneca, the Covid-19 vaccine maker, rallied 4.2% after it revealed a major deal with another drugmaker. AstraZeneca announced it will take full control over Caelum Biosciences in a deal worth $500 million.

On the other end, the biggest decliner among sectors was technology. European tech firms tumbled 0.7% on Wednesday, extending the slide from a day earlier.

September Jitters Roil Global Equities

Weighing on the outlook for growth, data showed Spain’s consumer prices rose to a 13-year high in September. Overall, this month has been challenging for European shares, as well as for stocks globally. The region-wide Stoxx 600 European benchmark is on track to finish September with a loss of more than 3%.

The Evergrande debt crisis, surging inflation and withdrawing pandemic-era stimulus have dampened growth expectations. The market, however, is putting solid effort to remain positive and continue grinding higher.

US Stocks Bounce Back from Tuesday Drop

Across the Atlantic, the $51tn US stock market finished Wednesday’s session mixed. In more detail, shares on Wall Street were able to recoup some of the steep losses from Tuesday, the worst day for stocks since May. The blue-chip S&P500 index rose 0.16%, while the Dow Jones Industrial Average gained 0.26%. In contrast, the tech-heavy Nasdaq Composite shed 0.24%.

US equities have been rattled by the Federal Reserve’s announcement last week. Policymakers at the US central bank revealed they expect to start tapering, or reducing, the monthly stimulus as soon as November.

On that note, traders and investors will keep a close eye on Fed’s upcoming regular policy meeting on Nov. 2-3.

Elsewhere in Financial Markets

In currency markets, the British sterling dropped to levels near $1.3410, its lowest point this year. The exchange rate at this level was last seen in mid-December 2020 when the Brexit saga was unfolding. The reason for the drop was a UK fuel crisis that led the UK market to expect a considerable slowdown in economic growth.

Shifting to crypto assets, the price of bitcoin remained steady near the $42,000-mark on Wednesday. The original cryptocurrency has been lacking buying momentum this month after China’s latest crackdown dampened the sentiment.

Last week, China announced it is banning all crypto-related transactions and activities. In addition, Chinese authorities have prohibited foreign crypto exchanges to offer services in mainland China.