European stock markets pushed higher on Monday as investors shrugged off worrying growth prospects, the possible easing of stimulus and rising inflation.
Financial stocks, mining firms and housebuilders led the gains on London’s benchmark index, while airlines dragged lower.
EasyJet (EZJ.L) was down 14% on the day after a warning from UBS on Friday that the company's recovery is likely to lag behind its competitors.
"Ryanair’s warning that prices will rise next year due to fewer flights, inflation and higher taxes did little to relieve the pain of rival easyJet," Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said.
"British Airways owner IAG struggled to stay positive, as the cloud of uncertainty remains over the UK’s traffic light system which has been blamed for dampening consumer demand. But Ryanair’s shares rose after indication the company will keep prices low over the next few months to win market share from beleaguered rivals."
Across the pond, the S&P 500 (^GSPC) was flat at the time of the European close while the tech-heavy Nasdaq (^IXIC) fell 0.4%. The Dow Jones (^DJI) bucked the trend and climbed 0.7%. Energy stocks, financial companies, and real estate companies were the top performers, while consumer discretionary and healthcare stocks lagged.
Investors are optimistic that the US Federal Reserve will continue stimulus measures to aid the recovery from the pandemic. Traders will also be watching Tuesday's US inflation data for clues about the future of the Fed's monetary policy.
Last week, Wall Street ended in the red, with the S&P 500 finishing at its lowest level in almost three weeks.
Watch: What is inflation and why it is important?
“For US investors the main concern appears to be a slowing economy coming at a time when inflation appears to be showing little sign of slowing down, and after US PPI for August saw yet another record high in data released at the end of last week,” Michael Hewson of CMC Markets said.
“With the US Federal Reserve due to meet next week, and the narrative clearly moving towards a tapering of asset purchases sooner rather than later, there appears to be a build up in anxiety that the continued rise in inflationary pressure may well be much more persistent than central bankers would have us believe, with the resultant rise in yields and rebound in the US dollar.”
Stocks in Asia were mixed on Monday with the risk of a slower recovery from the pandemic shadowing global markets.
In Japan, the Nikkei (^N225) climbed 0.2% and the Shanghai Composite (000001.SS) ended 0.3% higher. However, the Hang Seng (^HSI) fell more than 2% overnight as Chinese technology stocks buckled under regulatory clampdown in Beijing.
The fall in Hong Kong came amid a report that officials are looking to break up Ant Group’s Alipay. China’s online platforms have also been told to protect the rights of workers in the so-called gig economy.
“Buying the dip in China equities in this environment remains akin to catching a very sharp falling knife," Jeffrey Halley, senior analyst at trading platform Oanda, said.
“Asian equity markets are starting the week on a sour note after a negative close on Wall Street. Typhoon Chanthu is bearing down on Shanghai, forcing the closure of schools, ports and flight cancellations and may mute activity on mainland markets today.”