Europe midday: Markets flatline after recent rally, wind stocks drop

(Sharecast News) - The four-day rally for European stocks came to a halt on Tuesday with markets flatlining at a three-month high as investors digested a wave of newsflow from Donald Trump's first day in office as America's new president. The Stoxx 600 was up just 0.01% at 523.94 by lunchtime, stalling at its highest level since mid-October and within a whisker of its record closing high of 528.08 reached on 27 September. The index has risen more than 3% over the past four trading sessions alone.

On his inauguration day on Monday, Trump reiterated his promise to impose protectionist trade measures on goods imported to the US, signalling that 25% tariffs on Mexican and Canadian imports could begin as soon as next month.

However, the president refrained from announcing any new duties on goods shipped from elsewhere, which may have provided some relief to shareholders of European manufacturers - at least for now.

Nevertheless, investors in the European energy sector were reeling at Trump's announcement of a temporary freeze on new leases for offshore wind farms in the US, with shares of Ørsted in particular falling sharply.

In economic news, the headline ZEW Indicator of Economic Sentiment, which measures confidence among institutional investors in Germany, fell to just 10.3 in January, down from 15.7 in December and firmly below the consensus forecast of 15.4.

In the UK, figures released earlier by the Office for National Statistics showed that the unemployment rate and wages grew in the three months to November. The unemployment rate rose to 4.4% from 4.3%. Meanwhile, average earnings including bonuses grew 5.6% on an annual basis, up from 5.2% and in line with consensus forecasts.

Banks up, wind stocks down

Online bank Avanza was a high riser in Stockholm, jumping 10% after beating expectations with its fourth-quarter results. Revenues jumped 20% to SEK1.06bn, ahead of the SEK1.01bn forecasts, while lower-than-expected costs helped the bottom line come in ahead of estimates.

Lloyds and Bank of Ireland gained on the back of news that UK chancellor Rachel Reeves is stepping in to protect lenders from multibillion-pound payouts in the car finance mis-selling case. Shares in smaller peer Close Brothers surged more than 22%.

Leading the downside were renewable energy stocks, specifically those in the wind sector, after Trump signed an order to temporarily freeze new offshore wind farm leases, with the White House claiming that they "degrade our natural landscapes and fail to serve American energy consumers".

Danish wind farm developer Ørsted, which on Monday took a huge £1.4bn impairment on its US business, tumbled 14%, while Vestas Wind Systems, EDP Renovaveis, EDP-Energias de Portugal and Acciona also dropped.