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European equities remain stable after major rally in August

ZWICKAU, GERMANY – JULY 31: Workers assemble the drivetrain with an electric motor and battery from a VW ID.3 electric car at the Volkswagen factory on July 31, 2020 in Zwickau, Germany. Volkswagen has started taking orders for the car and hopes that the ID.3 will be an effective competitor to Tesla. (Photo by Jens Schlueter / Getty Images)

Jens Schlueter / Getty Images

European equities remained stable on Tuesday as a wave of production reports suggested a stronger economic recovery worldwide.

After a 2% gain on Monday, the Stoxx Europe 600 SXXP,
-0.41%
was fractionally lower.

The French CAC 40 PX1,
+ 0.08%
0.6% added while the German DAX DX: DAX and UK FTSE 100 UKX,
-0.55%
hugged the flat line.

The moves came after the 29th record for the Nasdaq Composite COMP,
+ 1.46%
on Monday, as the S&P 500 SPX,
+ 0.71%
0.7% added. Investors responded to production surveys among purchasing managers that were stronger than predicted in the US, China and Europe.

“August is normally a difficult month for equities, but in Covid’s year no trends are sacred and stocks prove to be very resilient as the Nasdaq hits a record high while the S&P hits the 3000 level,” said Rony Nehme , chief market analyst at Squared Financial.

Further contributing to the optimism was the statement by US Vice President Mike Pence, who told Fox News in an interview that a coronavirus vaccine could be released in the fall.

BP BP,
+ 5.97%
shares were up more than 6% when investors passed the loss of $ 16.8 billion for the second quarter and the decision to halve the dividend. BP outlined a new plan to cut oil and gas exploration by 40% over a decade while increasing spending on low-carbon activities. “We are waiting for more detailed details about the growth plans, but expect the market to respond positively to the ambition and direction of travel,” said Henry Tarr, analyst at Berenberg Bank.

EasyJet EZJ,
+ 7.80%
shares were up 9% as the airline said it spent £ 774 million in the last quarter of June, when it barely flew, compared to its previous forecast of £ 1 billion in costs. EasyJet said the occupancy rate in July, when it flew over 2 million people, was 84%.

Diageo DGE,
-6.54%
shares were down 6% because the liquor maker said sales during the fiscal year fell a worse than expected 9% and offered no sales guidelines for the current year.

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