European and US stock markets mixed as February rally cools

Watch: European stock markets mixed as February rally cools

European and US stock markets were mixed on Tuesday, punctuating a rally since the start of the month.

Asian stocks had advanced off the back of a continued rally on Wall Street on Monday, with the S&P 500 (^GSPC) hitting another record high in a sixth day of gains.

The FTSE 100 (^FTSE) and mid-cap FTSE 250 (^FTMC) in Britain closed 0.1% higher, as banks, pubs, housebuilders and other cyclical stocks gained.

A government minister said he expected UK hospitality firms to re-open “soon,” with the pace of the UK vaccine rollout and falling infection rates adding to market hopes of a faster return to normal. The CAC 40 (^FCHI) in Paris also ended the day 0.1% higher.

The Europe-wide Stoxx 600 (^STOXX) closed 0.2% lower, and the DAX (^GDAXI) lost 0.3% in Frankfurt after reaching an all-time high on Monday. It came after data showed German exports growth slowing, with trade up 0.1% month-on-month in December compared to a 2.3% rise in November.

The February rally also eased on Wall Street. The S&P 500 (^GSPC) and the Dow Jones (^DJI) were down 0.1% as the trading day finished in Europe. The tech-heavy Nasdaq (^IXIC) and the small-cap Russell 2000 (^RUT) were up 0.2%.

The cooling in momentum came after strong gains in Europe and the US on Monday. “The reflation trade helped markets hit new pandemic highs yesterday with recent market storms a distant memory as the prospect of a substantial US fiscal stimulus package and slowing COVID-19 infection rates caused risk assets to continue their February rally,” wrote Deutsche Bank analysts in a note.

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Most Asian stocks had made gains overnight, following gains in the US on Monday. China’s SSE Composite index (000001.SS) rose 2%, and the Shenzhen Component (399001.SZ) was up 2.4%. The Hang Seng (^HSI) in Hong Kong rose 0.6%. Shanghai composite gains are the biggest in a month.

Japan’s Nikkei was up 0.4%, and MSCI's broadest index of Asia-Pacific shares outside Japan also rose 0.4%. Japan's stocks were trading at their highest in three decades.

Deutsche Bank analysts noted the optimism about global economic recovery from the pandemic had been particularly strong in commodity markets.

Brent oil futures (BZ=F), the international benchmark, were trading 0.7% higher at $60.99 (£44.29) a barrel, after closing above $60 a barrel for the first time since January 2020 on Monday. West Texas Intermediate crude futures (CL=F) were trading 0.6% higher on Tuesday at $58.34.

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