(Bloomberg) -- European equities were muted Wednesday, weighed down by the escalating crisis in the Middle East, though oil price gains lifted energy stocks.
The Stoxx Europe 600 Index was little changed by the close. Utilities, retail and travel and leisure dropped the most, while the energy subindex added about 1.6%.
Retailer JD Sports Fashion Plc fell after supplier Nike Inc. reported a drop in quarterly sales. Defense stocks including Saab AB and Rheinmetall AG rose as Israel vowed to retaliate against Iran for firing about 200 ballistic missiles at Israel in a severe escalation of hostilities that has spurred fears of a wider Middle East war.
“We are keeping our balanced stance with a slight risk-asset overweight on equities plus commodities, as we believe that beyond geopolitical risk, the broader macro environment is still supportive,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg.
Urbahn added that he doesn’t expect a recession, while stimulus measures from China were “incrementally positive and more could be expected over the coming weeks.”
In a fresh stimulus boost, Beijing followed other major cities in relaxing home purchase rules.
Francois Rimeu, a strategist at La Francaise Asset Management in Paris, said he “would not stand against” forces such as the China stimulus, lower Federal Reserve interest rates and the absence of a US recession.
While Rimeu said he had little conviction on the outcome of the Middle East conflict, he added that he is “staying rather positive.”
The recovery in European stocks from the August selloff has faltered over the past month, pressured by uncertainty surrounding the US presidential election and the looming corporate earnings season. The Stoxx 600 Index eased about 0.4% in September, although that was a much smaller loss than is typical in that month.
Citigroup Inc. strategists David Groman and Beata Manthey recommended that investors add to “select” defensive stocks to hedge against volatility into the US election, before rotating into economy-linked cyclical stocks.
For more on equity markets:
- Spain Is in a Different League to Rest of Europe: Taking Stock
- M&A Watch Europe: Sanofi Consumer Unit; Brembo’s Pirelli Stake
- European Firms Lead Foreign IPO Volumes in New York: ECM Watch
- US Stock Futures Fall; Nike, LPL Financial, Talos Energy Fall
- Mulberry’s Handbags at Dawn: The London Rush
You want more news on this market? Click here for a curated First Word channel of actionable news from Bloomberg and select sources. It can be customized to your preferences by clicking into Actions on the toolbar or hitting the HELP key for assistance. To subscribe to a daily list of European analyst rating changes, click here.
--With assistance from Michael Msika.
©2024 Bloomberg L.P.