By Geoffrey Smith
Investing.com — European stocks were mostly higher after early trading on Wednesday, after following the U.S. lower on Tuesday as recession fears hit the world’s most important stock market.
By 4:25 AM ET (0825 GMT), the benchmark was up 0.3% at 433.02 points, while the German was up 0.2%, the French up 0.1%, and the U.K. up 0.3%.
The market dynamic has shifted in favor of value over growth again, in the wake of a profit warning from Snapchat parent Snap (NYSE:) that wiped $135 billion off the market value of social media companies on Tuesday. In early trading, basic materials and oil and gas were the strongest sectors, while tech was the weakest. Pharma also underperformed after Pfizer (NYSE:) announced it will sell a range of branded drugs at cost to low-income countries, something that threatens higher-margin sales by rivals.
The mood remains dominated by the macro environment, as central banks balance the risks of runaway inflation and slowing growth. In public comments earlier, two European Central Bank policymakers, Bank of Finland Governor Olli Rehn and board member Fabio Panetta, both came out against a 50 basis point increase in the ECB’s deposit rate in July, echoing President Christine Lagarde’s assertions over the last week that ‘gradual’ rate increases are preferable as long as inflation expectations stay reasonably anchored.
Rehn noted that the ECB is likely to revise down its growth forecasts for the Eurozone this year when it meets next month, a meeting when it is expected to announce the end of net bond purchases, paving the way for a rate hike in July. That would be the ECB’s first hike in a decade. The fell 0.6% to $1.0671.
Among individual movers, the U.K. supermarket technology group Ocado (LON:) gapped sharply lower at the opening before paring losses after its joint venture partner Marks & Spencer (OTC:) warned of a ‘normalization’ of demand trends as the pandemic ebbs. Ocado stock was down 4.0% by 4:25 AM ET, the worst performer in the FTSE 100.
Glencore (LON:) stock rose 1.8%, building on gains made on Tuesday after it agreed to settle long-running allegations of bribery for $1.5 billion. However, it failed again at resistance just below 11-year high that it hit in April.
By contrast, TotalEnergies (EPA:) stock did manage to post a new high, rising 1.4% to its highest since 2018 after announcing a deal that will strengthen its position in renewables and its position in the U.S. market, in general. The French company is paying $1.6 billion for a half share in Clearway Energy Group (NYSE:), the third-largest generator of renewable electricity in the country. It’s the latest in a series of moves intended to reposition the oil and gas giant as a producer of more sustainable energy.
Other energy providers also recovered their poise after heavy losses on Tuesday in response to reports that the U.K. is considering levying a windfall tax on their profits. SSE (LON:) stock, which fell over 10% on Tuesday, recouped nearly half of that in early trading as the scale of division within the U.K. government on the issue became clear.
Elsewhere, global oil prices remained well bid after a bigger-than-expected decline in U.S. crude stocks last week. was up 1.0% at $110.82 a barrel, while was up 0.9% at $111.70.