European Shares Rise as Norway Ends Oil Strike
On Wednesday, European shares rose after the strike in Norway of oil and gas workers came to an end, thereby easing worries about energy supplies. A 15.5% rise in the shares of Just Eat Takeaway.com was also recorded thanks to Amazon’s announcement about buying a 2% stake in its floundering Grubhub business.
There was a 1.7% rise in the pan-European STOXX 600 index, after it had declined in the previous session by 2.1% due to the threat of falling energy supplies brought on by the Norwegian workers’ strike. The euro was also severely dented because of this news and it only extended its slide on Wednesday, despite the uplifting change.
Nonetheless, broad-based gains were recorded, with the biggest gains recorded in tech stocks and consumer staples. There was a fall in the energy sector, as recession fears drove oil prices down to lows of 12 weeks. One negative news after the other has put the stock markets under a great deal of pressure this year, which includes the political turmoil in Britain, the coronavirus lockdowns in China and the gas rationing talks in Europe.
So far, there has already been a 16.5% decline recorded in the STOXX 600 this year, with investors making adjustments to their expectations of economic growth and corporate profits due to the aggressive interest rate hikes by the central banks for curbing inflation.
Market analysts said that the yield weakness and a slide in the euro indicates that investors are highly concerned about the global economic growth and the impact it could have in the long-term. Therefore, it is unlikely that there would be much staying power in bargain hunting where stocks are concerned.
On Wednesday, data indicated that there was a slight increase in retail sales in May in the euro zone, but it was still below the expectations of the market. Moreover, it also highlighted the customer spending on items like food and drinks and tobacco had been reduced.
The STOXX 600’s biggest gainers included Just Eat Takeaway.com, thanks to the announcement from Amazon about buying a stake in the company’s meal delivery business called Grubhub. The ecommerce giant also disclosed that it would offer access to the service for free to its Prime Members for a year.
Market analysts said that this deal is exactly what Just Eat needs because it will give it stability in the wake of the economic uncertainty in the market. There was another 2.9% decline in Uniper, as the Utility’s Finnish parent said that it was talking to Germany about easing the company’s financial issues.
Ratings of both Finnish Fortum and Uniper were put on creditwatch negative by the S&P. There was a 5.1% gain in Abrdn after a share buyback program worth 300 million pounds was announced by the British asset manager. There was a 20.6% rise in Trainline after it forecast strong revenue growth for the next year, with travel rebounding after the pandemic. Meanwhile, a 6% fall was recorded in Faurecia as its stock was rated ‘underweight’ by Barclays.