European stocks close mostly lower; FTSE 100 climbs almost 1%
The pan-European Stoxx 600 ended the session down by 0.2%, with health care stocks shedding 0.9% to lead losses while the insurance sector gained 0.6%.
Britain’s FTSE 100 bucked the downward trend to climb 1%. The export-heavy index was boosted by a weakening of the pound against the dollar and optimism over the swift progress of vaccine rollouts across the U.K.
The major U.S. averages pulled back from record highs on Tuesday to end the session in the red despite strong economic data — including March’s jobs report that beat expectations — which fueled stocks’ rise in recent sessions.
All three major U.S. averages are coming off their fourth straight quarter of gains as the economic recovery from Covid-19 accelerates. U.S. stocks struggled for direction on Wednesday, as focus turns to the minutes from the latest meeting of the Federal Reserve.
“We expect the minutes to confirm that the Fed is not considering to start normalization sooner than it pledged to do so, which could allow stock indices to continue trending north,” said Charalambos Pissourous, senior market analyst at JFD Bank.
Markets are also digesting the European Medicines Agency’s conclusion that there is a possible link between the coronavirus vaccine developed by AstraZeneca and the University of Oxford and rare blood clotting issues in adults who received the shot.
AstraZeneca shares dipped 1.2% by the market close Wednesday.
On the data front, IHS Markit’s final euro zone composite purchasing manager’s index (PMI) on Wednesday showed business activity in the bloc bouncing back in March despite a reintroduction of restrictions in several countries.
The composite PMI, which combines manufacturing and services and is seen as a useful gauge of economic health, came in at 53.2, up from 48.8 in February and above the 52.5 flash estimate.
Sebastien Galy, senior macro strategist at Nordea Asset Management, said Wednesday would be an interesting test since there is “little to move markets” besides a Reserve Bank of India decision, European PMIs and the Fed minutes.
“It is in the silence that one can better observe underlying mechanisms. Will the dollar rally as bond curves continue to steepen and equities mildly rally which seems the more probable scenario?” Galy said.
“The temptation when reaching new highs in the stock market is a return of concerns about valuations and hence a rotation to value, but with a Fed reaction function suggesting it will be well on hold till 2023, the reflation trade simply de-anchors more from fundamentals boosted by a cyclical upswing.”
In terms of individual share price movement, French utility EDF climbed 10.5% after Reuters reported, citing union sources, that the French government is planning a minority shareholder buyout valued at around 10 billion euros ($11.87 billion).
At the bottom of the European blue chip index, Dutch tech investment firm Prosus slid 4.6% after announcing plans to sell a 2% stake in Tencent.