European Stocks Rise as Waning Trump Effect Flips Industry Moves

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  • Utilities, real estate shares recover as bond selloff halts
  • Commodity stocks cap their biggest decline since June

Why Stocks Are Crushing Bonds in Wake of Election

European stocks rose, boosted by gains in energy producers and a recovery in shares most hurt in the immediate aftermath of Donald Trump’s win.

Bond-proxy sectors including utilities and real estate shares advanced as a global debt selloff spurred by bets on economic growth abated. Energy shares rebounded from their lowest level since September after OPEC nations were said to be working toward securing a deal that would stabilize prices. Commodity producers, which had rallied in the days following the vote outcome, were the biggest losers.

“It’s still difficult to draw any firm conclusions about a long-term directional bias of stock sectors after the Trump election,” said Michael Hewson, a market analyst at CMC Markets in London. “There have certainly been benefits in the aftermath for certain sectors like construction and financials, but volatility will persist. European equities as a whole really have not done that much.”

The Stoxx Europe 600 Index added 0.3 percent at the close, erasing a slide of as much as 0.3 percent. The benchmark has swung between intraday gains and losses for six sessions, matching a streak last seen in August, and has struggled to break out of a trading range of about 20 points since July.

Last week’s U.S. vote has dominated market moves in recent sessions, with investors betting on industries Trump’s policy stances could affect. Speculation he will spend more on infrastructure had buoyed commodity stocks, while lenders surged on optimism he may ease regulatory oversight. Related trades among various asset classes showed signs of moderating on Tuesday -- European bank shares were little changed after reaching a 10-month high, the dollar halted a four-day rally and emerging assets rebounded.

Stoxx 600 miners posted their biggest drop since the aftermath of the U.K.’s secession vote, after surging 13 percent in the past six sessions. Anglo American Plc and Glencore Plc fell at least 5.4 percent. Energy shares rallied the most since September, boosted by gains exceeding 2.6 percent in BP Plc and Total SA.

Among other stocks active on corporate news:

  • Hennes & Mauritz AB added 4.8 percent after the retailer posted an increase in October sales. 
  • EasyJet Plc climbed 5.3 percent as the airline said it’s working to streamline operations in the wake of Brexit-fueled sterling decline.
  • Volkswagen AG added 1.3 percent after people familiar with the matter said it reached an agreement with U.S. environmental regulators to fix or buy back around 80,000 vehicles with tainted engines related to its diesel-emissions cheating.
  • Nokia Oyj dropped 3.8 percent after predicting a 2017 profit margin for its main business that trailed estimates.
  • TalkTalk Telecom Group Plc slid 5.5 percent after forecasting full-year earnings at the lower end of a previous projected range.