Early gains wane in Europe as tech, auto stocks weigh

(Reuters) – European shares inched lower on Tuesday as an early boost from commodity, bank and travel stocks was offset by losses in highly valued technology companies and automakers.

The pan-European STOXX 600 index inched down 0.1%, with the German DAX falling 0.6% and UK’s FTSE 100 rising 0.5% after a long weekend.

Miners and oil and gas stocks rose more than 1% each, reflecting a rally in commodity prices, as investors bet on a strong global rebound on the back of massive vaccination drives in developed countries and unprecedented stimulus.

“Notably the UK seems to be moving through the gears on reigniting the engine of the economy without hitting a road bump of rapidly rising infections or hospitalisations,” said AJ Bell investment director Russ Mould.

Travel and leisure sector rose 0.2%, benefiting from Britain’s expected announcement of a green list for countries that people can travel to on holidays.

Tech stocks, however, slumped 1.2% after their Wall Street peers came under pressure on Monday.

Chipmaker Infineon fell 4.5% after CEO Reinhard Ploss said he was expecting supply constraints in the automotive segment to only ease in the second half of this year, with lost volumes likely to be made up in 2022.

Europe’s automakers fell 0.5%.

German meal-kit delivery company HelloFresh fell 4.5% as worries about consumer behaviour, amid easing lockdowns, overshadowed a surge in first-quarter customer base.

Software company Teamviewer, another stay-at-home beneficiary, dropped 7.6% despite reporting quarterly orders and core profit ahead of expectations.

More than half of the STOXX 600 companies have reported so far in what has largely been a positive earnings season, with 73% of them topping profit expectations, as per Refinitiv IBES data.

Jewellery maker Pandora jumped 4.8% on reporting quarterly operating profit above estimates, fuelled by strong online sales and plans to push for sales growth in the United States and China.

Dassault Aviation jumped 7.9% after Egypt’s defence ministry said it had signed a contract with France to buy 30 Rafale fighter jets.

Italy’s top commercial broadcaster Mediaset gained almost 3% after it agreed on a consensual break-up from its second-largest investor Vivendi. Vivendi’s shares slipped 0.3%.

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