European Stocks Rise as Mining Sector Drives Gains; Copper Prices Surge and Nvidia’s Q2 Results Awaited
Fiona Nanna, ForeMedia News
5 minutes read. Updated 1:11PM GMT Tues, 27August, 2024
European stock markets experienced a modest rebound on Tuesday, buoyed by a surge in copper prices and gains in the mining sector. The pan-European STOXX 600 index advanced 0.3% to 519.51 points, reversing earlier losses and reflecting positive sentiment in the commodities sector.
The basic resources sub-index emerged as the top performer, climbing over 1% as copper prices soared to a near six-week high. This increase was driven by optimistic forecasts of a potential U.S. interest rate cut, which is expected to stimulate demand for industrial metals.
Germany’s benchmark DAX index rose 0.4% following the release of new GDP figures, which revealed a 0.1% contraction in the economy during the second quarter of 2024. Despite this slight dip, the market remained optimistic, driven by broader gains in the resources sector.
In Sweden, the OMXS30 index edged up 0.1%, buoyed by a 1.4% decline in the producer price index for July, indicating a cooling in inflationary pressures. Investors are now awaiting further economic data from Germany, Spain, France, and Italy, which will provide additional insights into the region’s economic health.
The European Union’s inflation report, due on Friday, is anticipated to provide critical signals about the European Central Bank’s future policy decisions. ECB policymakers have maintained a cautious stance on borrowing costs, given the mixed performance of the region’s economic sectors. “We are still in a restrictive environment because the services sector continues to grow, even though the manufacturing sector is shrinking,” commented Krasimir Yordanov, a portfolio manager at SKY Asset Management.
In the tech sector, all eyes are on Nvidia, which will report its second-quarter results on Wednesday. With the company’s shares showing signs of volatility, even a slight miss in expectations could significantly impact its stock price. The tech sector’s performance has been a major influence on European markets, with notable weight on the benchmark index due to the absence of large AI-related stocks in Europe.
Among individual stock performances, Bunzl (BNZL.L) saw an impressive 8.6% rise following an upward revision of its annual adjusted operating profit forecast. Similarly, Santander (SAN.MC) gained 1.5% after announcing a €1.525 billion ($1.7 billion) share buyback program, a move that bolstered investor confidence.
Ryanair’s stock increased by 5% after CEO Michael O’Leary reassured investors that the airline no longer expects a significant drop in average fares this summer. EasyJet (EZJ.L), a competitor, also saw its shares climb 4.4% in response to positive market sentiment.
Conversely, Flughafen Zürich (FHZN.S) experienced a 4.6% drop after failing to meet first-half margin expectations. Associated British Foods (ABF.L) fell 2.9% following a downgrade by Deutsche Bank, which reduced its rating on the stock from “Buy” to “Sell.”
As the European market navigates through a mixed economic landscape, the performance of key companies and upcoming economic data will continue to play a crucial role in shaping investor sentiment.
