Europe open: Shares rally as oil prices fall on demand worries
European shares opened higher on Wednesday, rebounding from losses in the previous session as oil prices fell again on concerns over weaker demand due to rising Covid cases globally.
The pan European Stoxx 600 benchmark index was up 0.77% in early deals with all major regional bourses higher.
Oil prices fell for a second day as the rally in crude fell away. Brent crude was down 1.7% at $77.75 a barrel and US light crude traded 1.8% lower at $73.9 a barrel with crude inventories in the US rising unexpectedly.
Prices on Tuesday pushed beyond $80 as economies recover from the coronavirus crisis and demand increased.
Stocks in the US fell overnight as the benchmark 10-year Treasury yield touched a high of 1.567%, a move that prompted tech stocks to lead the broader markets lower with Facebook, Microsoft and Alphabet losing more than 3%.
Rising bond yields hurt growth stocks, including tech stocks, because they lower the relative value of future earnings.
“Once again it is fears about surging energy prices, supply chain disruptions, and concerns about more persistent inflation that is sparking a move out of the more highly valued areas of the stock market, as the volatility that we saw last week, continues into this week as bulls and bears indulge in a game of pass the parcel,” said CMC Markets chief market analyst UK Michael Hewson.
In the UK, queues formed again at petrol stations as panic-buying continued despite refineries reporting no shortage of fuel.
In equity news, German food industry system supplier company GEA Group topped the Stoxx with a 4.3% rise, while British clothing retailer Next gained 2.77 as both reported positive results.
Anglo-Swiss drugmaker AstraZeneca was up after it said its newly acquired Alexion division will purchase the remaining equity in peer Caelum Biosciences in a deal that could be worth up to $500m.