European shares rebound as tech stages cautious comeback

Credit: REUTERS/Reuters Staff

By Anisha Sircar

Jan 31 (Reuters) - Tech stocks led a rebound in European shares on Monday, even as worries lingered over policy tightening, soaring inflation and geopolitical tensions ahead of key UK and European central bank decisions due later this week.

The pan-European STOXX 600 .STOXX climbed 1.1%, rebounding from their worst week in more than two months, with tech stocks .SX8P up 2.9% after losing 13% this month.

Concerns over gas supplies to western Europe persisted as Britain warned it was "highly likely" that Russia was looking to invade Ukraine and the head of NATO said the continent needed to diversify its energy supplies.

"Investors will continue to grapple with higher rate expectations and geopolitical risks on one side, set against robust macroeconomic and corporate fundamentals on the other - as a result, volatile trading looks set to continue," said Mark Haefele, chief investment officer at UBS Global Wealth Management.

However, "the sharp fall in many high-quality tech firms is already creating opportunities for longer-term investors to add exposure," Haefele said.

The STOXX 600 was set to end January about 3.5% lower, raising questions about the longer-term outlook for equities in 2022 as fourth-quarter earnings, the West-Russia standoff over Ukraine, and potentially tighter monetary policies weigh on markets.

Focus is now on the European Central Bank and the Bank of England meetings on Thursday, which are expected to offer clues to their policy paths after the U.S. Federal Reserve's hawkish tone last week led to wild gyrations across markets.

No immediate policy action is expected since the ECB in December laid out plans to wind up its 1.85 trillion euro ($2.09 trillion) pandemic stimulus scheme by end-March, but price pressures remain strong and markets want a sense of whether the ECB is getting closer to a more hawkish stance.

Meanwhile, markets expect a 50 basis-point rate increase from the Bank of England, its second hike in a row. BOEWATCH.L

Vodafone VOD.L gained 4.2% after saying it would work with Intel INTC.O and other silicon vendors on designing its own chip architecture to drive innovation and efficiency in nascent OpenRAN network technology.

KPN KPN.AS, the largest telecom provider in the Netherlands, added 1.7% after announcing a new share buyback programme and a higher dividend over 2022, as its core profit rose on the back of growing mobile revenues.

Italian energy services group Saipem SPMI.MI plunged 27.2% after issuing a profit warning and withdrawing an outlook given in October, citing a deterioration in margins due to the pandemic and higher raw material costs.

(Reporting by Anisha Sircar in Bengaluru; Editing by Subhranshu Sahu)


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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