(Bloomberg) -- European equities were little changed as concern mounted about the impact of the delta coronavirus variant, weighing on economically sensitive sectors that had been driving the summer rally.
The Stoxx Europe 600 Index rose less than 0.1% by the close in London, with cyclical sectors including automotive, banking and travel & leisure declining the most. Health-care and personal care, drug and grocery store stocks outperformed.
Equities got a boost from better-than-expected corporate earnings during July and early August, rallying for 10 straight days through the end of last week. They started to retreat from record levels on Monday as coronavirus cases in Asia cast doubt on a continued demand recovery. Closer to home, the Telegraph reported overnight that U.K. hospitalizations are at the highest since March.
“We've been waiting for this to happen for weeks,” MPPM EK head of trading Guillermo Hernandez Sampere said of the reversal. “The only thing missing before we can call this a correction is slightly more meaningful volume.”
Hernandez Sampere has been increasing his cash position from low single-digit percentages to high single digits and expects this to keep rising, he said. This isn't just out of distrust of high valuations: initial public offerings are back on the menu in September and Hernandez Sampere wants to be ready to strike at opportunities.
Among major movers, BHP Group Plc surged 3.4% after the miner announced that it would merge its oil & gas operations with Woodside Petroleum Ltd. Meanwhile, TUI AG and Whitbread Plc were among the worst-performing hospitality stocks due to virus concerns.
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