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European shares struggle for direction after record run

(Reuters) – European stocks hit pause on Monday after a record run as investors treaded cautiously ahead of U.S. inflation data, while a clutch of disappointing earnings countered the impact of a rise in oil stocks.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, November 5, 2021. REUTERS/Staff

The pan-European STOXX 600 slipped 0.04% after hitting intra-day record highs on Friday.

Asian markets ended slightly higher even as the mood was wary on expectations of another high reading for U.S. consumer prices, due to tightness in the labour market combined with dislocation in global supply chains. [MKTS/GLOB]

“After the busy session last week, the clock has gone back to zero as we’re looking at months and months before monetary policy is changed, if at all,” said David Madden, markets analyst at Equiti Capital.

“It’s the best of both worlds: U.S., UK, and euro zone economies are recovering at a decent rate, and we’re not expecting any major change from the ECB, Bank of England, or Fed for some time.”

European equities hit new highs every day last week following upbeat U.S. payrolls data, positive update from U.S. drugmaker Pfizer on its COVID-19 pill and a strong earnings season so far.

However, major regional indexes including France’s CAC 40, Germany’s DAX and UK’s FTSE drifted slightly into the red on Monday even as ECB’s chief economist Philip Lane said inflation would ease next year and remain weak in the near term.

Oil stocks rose 1.5% and were the top gainers in Europe, as crude prices firmed after the passing of U.S. infrastructure bill on Saturday, and as Saudi Arabia’s state-owned Aramco raised its crude selling price. [O/R]

Richemont advanced 2.5% after news reports that activist hedge fund Third Point had built a stake in the luxury goods firm.

The biggest decliner was consumer goods group Henkel, which dropped 5.6% after trimming its full-year forecast and saying it could not fully compensate for a spike in input prices.

French conglomerate Bouygues shed 4.8% following its 7.1 billion euro deal to buy technical services group Equans from Engie.

UK’s Playtech gained 2.3% after the online gambling software developer received a takeover bid from its second-biggest shareholder Gopher Investments.

Frankfurt-listed shares of Tesla dropped 6.3% after Twitter users said “yes” to Tesla Chief Executive Officer Elon Musk’s proposal to sell 10% of his stock in the company.

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