European stock extend recovery following US approval for Pfizer vaccine

European stocks extended their recovery on Tuesday after a full US approval of a Covid-19 vaccine boosted Wall Street to record highs, while latest data showed a stronger-than-expected economic recovery in Germany.

The pan-European Stoxx 600 index rose 0.3 per cent by 0711 GMT after last week’s sell-off knocked it lower by 3 per cent from its record highs.

Travel and leisure, technology and mining stocks were the top gainers, up between 0.9 per cent and 1.2 per cent.

Wall Street's Nasdaq reached an all-time closing high after US health regulators granted full approval to the Covid-19 vaccine developed by Pfizer and BioNTech in a move that could accelerate US inoculations.

Mining and oil stocks aid recovery in European markets

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Meanwhile, data showed Germany’s gross domestic product grew by 1.6 per cent on the quarter from April to June, slightly up from its previous estimate of 1.5 per cent as private consumption and state spending helped.

Marks and Spencer Group rose 3.1 per cent to the top of the Stoxx 600 after Berenberg and Credit Suisse raised their price targets on the company's stock.

The Ftse 100 index inched 0.1 per cent higher and was set to rise for a third consecutive session. Industrial metal miners and oil stocks led the gains, climbing 1.2 per cent and 0.6 per cent respectively.

However, limiting the advances were heavyweight bank stocks that weakened 0.6 per cent to be the top losing sub-index in early trade.

The Ftse 100 has added 10.3 per cent so far this year, but is still 8 per cent away from its record highs hit in 2018 and underperforming its developed market peers in the United States and Europe.

A slowing economy due to easing consumer demand, risks around central banks pulling back monetary support sooner than expected, and labour shortages have all weighed on the Ftse 100 recently.

“Market sentiments were largely battered by the record-breaking number of coronavirus cases in the Asian nations, certain domestic challenges including staff shortages, inadequacy of semiconductors and relatively lower consumer spending,” said Kunal Sawhney, chief executive of Kalkine.

“With the Delta variant cases beginning to subside in the UK, market participants are now looking forward to the penultimate quarter of the present fiscal, with job vacancies remaining near record highs, effectively alleviating the fears of potential employment threat,” Sawhney said.

The domestically focussed mid-cap index added 0.5 per cent, inches away from record highs. Travel stocks were among the top boosts.

BHP Group rose 1.1 per cent even after S&P Global said the miner was at risk of a two notch downgrade that would provoke its lowest ever credit rating, as the sale of its petroleum business raises the miner’s dependence on its major business of iron ore.

Wood Plc dropped 4.6 per cent after the engineering and consultancy firm forecast lower annual revenue and reported a 14.1 per cent fall in first-half profit. – Reuters