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European stocks inch up to record high on healthcare gains, miners weigh

Miners knock European stocks lower ahead of key central bank decisions
Miners knock European stocks lower ahead of key central bank decisions   -   Copyright  Thomson Reuters 2021
By Reuters

By Anisha Sircar and Ambar Warrick

– European shares crept up to a record high on Tuesday as a strong outlook from hearing aid maker Demant supported healthcare stocks, although broader gains were stifled by losses in miners and the prospect of major central bank meetings.

The pan-European STOXX 600 index closed 0.1% higher at 479.71 points, with healthcare stocks leading gains with a 1.3% rise. Denmark’s Demant was among the best performers in the sector after it unexpectedly hiked its annual profit outlook.

Mining stocks led losses, down 2.9% on a slump in iron ore and copper prices, as loose supply conditions and a poor demand outlook for China rattled metal markets. [IRONORE/]

Antofagasta and ArcelorMittal SA were among the worst performers in the sector.

The STOXX 600 had closed at a record high on Monday, carrying over strong gains from October on the back of positive earnings and a jump in bank stocks fuelled by expectations of a rate hike by the European Central Bank next year.

“The environment of higher inflation and higher yields favours certain corporates, but it’s uncertain for others, which leaves you in a very volatile market,” said Bert Colijn, senior economist at ING.

“But the underlying moves are positive, with better-than-expected GDP figures and a quicker-than-expected recovery.”

About 166 companies of the STOXX 600 have reported quarterly earnings so far and 65.7% have topped profit estimates, according to Refinitiv IBES data. In a typical quarter, 52% beat estimates.

Focus now turns to a decision by the Fed on when it plans to begin tapering its massive stimulus measures, as well as a decision from the Bank of England later in the week. Both banks are expected to outline measures to contain a recent spike in inflation.

A survey showed euro zone manufacturing activity remained strong in October, but supply chain bottlenecks and logistical problems sent input costs soaring and curtailed growth.

Among individual stocks, meal-kit delivery firm HelloFresh surged 17.3% after raising its sales forecast for 2021.

Weighing on UK’s blue-chip FTSE 100, the world’s largest online betting group Flutter Entertainment dropped 7.7% after trimming its full-year forecast due to unfavourable sports results and a temporary closure of its Dutch operations.

London-based Standard Chartered slumped 7.8% despite reporting a doubling in profit for the third quarter. The bank said it had $4.2 billion in exposure to China’s real estate sector, where China Evergrande Group has been grappling with an enormous debt pile.