European utilities rally in steady markets as yields, megacaps drop

VERBUND AG

05/03/2024 15:23

MILAN, March 5 (Reuters) - Shares in European utilities
rose sharply on Tuesday, outperforming steady markets, as the
battered rate-sensitive sector benefited from a drop in bond
yields ahead of the ECB policy announcement later in the week.
    The sector has been a laggard this year as investors had
been chasing fatter returns from megacap stocks, which in Europe
include Novo Nordisk  NOVOb.CO , ASML  ASML.AS  and LVMH
 LVMH.PA , which were all lower on Tuesday.
    Some traders view utilities as oversold. A recent note by
Morgan Stanley said European utilities deserved a "second look"
citing discounted valuations, high dividend yield and strong
growth drivers.  
    By 1532 GMT, the STOXX Utilities  .SX6P  index had risen as
much as 1.9%, set for its biggest one day gain in five months.
Top gainers included Verbund  VERB.VI , Fortum  FORTUM.HE  and
A2A  A2.MI . The broader STOXX 600 was down 0.3% on the day. 

 (Reporting by Danilo Masoni, editing by Samuel Indyk)
 ((Danilo.Masoni@TR.com; Reuters Messaging:
danilo.masoni.thomsonreuters.com@reuters.net))