European Stocks Advance on Earnings as Banks Jump With Barclays
European Stocks Advance on Earnings as Banks Jump With Barclays
(Bloomberg) -- European stocks rose after four days of declines as investors focused their attention on the earnings season.
The Stoxx Europe 600 Index added 0.6% at the close. Banks led gains, with Barclays Plc and Nordea Bank Abp climbing on better-than-expected earnings. Energy shares also outperformed.
European equities are still down 1.4% for the week concerns over the rise in virus cases across the region as well as the absence of a U.S. fiscal stimulus deal weighed on sentiment for four sessions in a row. Growing bets of a win for Democrat Joe Biden in the Nov. 3 U.S. election have spurred a rotation into cyclicals and out of defensive equities as the new administration is expected to accelerate economic support measures.
“Growing market expectations of a Democratic sweep are boosting the reflation trade, but at the same time, the Europe macro outlook is looking more uncertain given Covid resurgence and the slow policy action,” Barclays Plc strategists led by Emmanuel Cau wrote on Friday.
Kering SA dragged retailers lower after an underwhelming quarterly performance of its Gucci brand.
JPMorgan Chase & Co. strategists led by Mislav Matejka said in a note on Friday that European companies are showing an elevated earnings beat rate so far. In Europe, they said that third-quarter earnings-per-share growth is down, but has surprised positively by 14%. The strategists added that earnings delivery for cyclical sectors, including industrials and discretionary has been “poor,” while defensives and technology are doing better.
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