European stocks ended trading on Monday little changed as the UK enjoyed a bank holiday, but were set for strong monthly gains on expectations that continued central bank support would sustain an economic recovery.
The pan-European Stoxx 600 ended flat at 472.68 points but was on course to end August with a 2.4 per cent rise, marking its seventh straight month of gains in what would be its longest such winning run in over eight years.
Global equities remained supported after US Federal Reserve chairman Jerome Powell explained on Friday why the central bank saw no rush to tighten monetary policy, and offered no signal on when it plans to cut its asset purchases beyond saying it could be "this year".
"For equity markets, the gradual process is positive, because it is clear the Fed wants to continue to support the economy for as long as needed to achieve a full recovery," said Willem Sels, chief investment officer of private banking and wealth management at HSBC.
“It is therefore no surprise that cyclical sectors reacted most positively to the news.”
The Iseq overall index edged 0.2 per cent higher to 8,855.74, as the market struggled to find direction with the absence of UK investors. Banking stocks put in a mixed performance as AIB added 1.3 per cent to €2.61 and Bank of Ireland dipped by 1.3 per cent to €5.22.
Dalata Hotel Group added 2 per cent to €3.81, extending a solid run from Friday, as investors checked into the group ahead of first-half results on Wednesday in the hope that it will benefit from a further unwinding of Covid-19 restrictions from next week.
Uniphar also attracted interest, rising 2 per cent to €4.02, ahead of results on Wednesday.
CRH dipped 0.1 per cent to €45.19, as the stock paused for breath following a strong performance late last week after the building materials giant reported robust first-half figures.
Chemical stocks, which are likely to benefit from an economic bounceback, were the best performers for the day, rising 0.6 per cent, while technology stocks rose 0.5 per cent
Oil and gas stocks closed flat as crude prices retreated from three-week highs after a powerful hurricane slammed into the US Gulf coast, forcing shutdowns and evacuations of hundreds of offshore oil platforms.
After hitting record highs in mid-August, European stocks have struggled to reclaim the highs on worries about tighter regulation of Chinese tech firms and as a resurgence in Covid-19 cases prompted fresh lockdowns in parts of the world.
A study showed people who get the Delta variant of the coronavirus are twice as likely to be hospitalised as those who were infected by the Alpha variant.
However, the European Central Bank expects the more contagious variant to have a limited impact on the euro zone economy due to an advanced vaccination campaign.
Among individual stocks, French shares of carmaker Stellantis fell 0.8 per cent after the company said it was extending production halts at several plants in Europe due to a shortage in microchips.
The S&P 500 and Nasdaq hit record highs by mid-afternoon as technology stocks jumped after the Federal Reserve’s dovish comments eased fears of a sudden tapering in monetary stimulus and boosted optimism around an economic recovery.
Apple climbed to an all-time high, while Microsoft, Amazon. com and Google owner Alphabet each rose. High-growth tech stocks tend to benefit from expectations of lower rates because their value rests heavily on future earnings.
The benchmark index is tracking its longest monthly winning streak since 2018 on the promise of easy money, with investors shrugging off signs of a slowing economic recovery and surging Covid-19 cases.
US-listed shares of Chinese gaming firm NetEase slumped as Chinese regulators slashed the amount of time players under the age of 18 can spend on online games to an hour on Fridays, weekends and holidays.
Shares of satellite transporter start-up Astra Space plummeted after the test launch of its rocket LV0006 ended prematurely about 2½ minutes after lift-off. – Additional reporting: Reuters