European Stocks Advance to a Record as Earnings Boost Appetite

(Bloomberg) -- European stocks climbed to a record high as corporate earnings continued to support risk appetite. 

The Stoxx Europe 600 rose 0.7% by the close in London, with banking and construction sectors leading the advance. In France, the CAC 40 Index closed just 0.4% away from its first record high since 2000. 

European stocks last month posted their best gain since March, bolstered by earnings reports and strength in defensive sectors as well as financials, which benefited from higher bond yields. Seasonality also suggests the rest of the year may bring further gains for the region’s equities.

“Positive earning surprises are a big part of the story,” said Joachim Klement, head of strategy, accounting and sustainability at Liberum Capital. Companies posting earnings that beat expectations “should support European markets this week and throughout the month,” he said.

Bearish sentiment from the last two months is now recovering quickly, encouraging investment into the market, Klement added.

Morgan Stanley said the European earnings beat is “very healthy given the trickier operating backdrop” in the third quarter. Results are coming in well ahead of expectations and margin headwinds are manageable, strategists led by Ross MacDonald wrote in a note.

Meanwhile, JPMorgan Chase & Co. said equities will continue climbing the “wall of worry” relating to China, supply bottlenecks and the labor market. Stock markets can also tolerate central bank tapering given ample excess liquidity, strategists led by Mislav Matejka wrote in a note.

U+I Surges on Takeover, Pandora Shares Sink: EMEA Equity Movers

Among individual movers, Barclays Plc fell as much as 3.7% before closing 0.7% lower as Chief Executive Officer Jes Staley stepped down after receiving U.K. regulators’ preliminary conclusions from a probe into his ties to the financier and sex offender Jeffrey Epstein. Denmark’s Pandora A/S tumbled the most since August 2020 after the jewelery company reported some preliminary third-quarter numbers.

Meanwhile, BT Group Plc jumped as much as 7% after the telecom company said it reached its cost-savings goal ahead of its March 2023 target.

• Equities: Euro Stoxx 50 up 0.7%, FTSE 100 up 0.7%, DAX up 0.7%, CAC 40 up 0.9%, FTSE MIB up 1.2%, IBEX 35 up 1.4%, AEX-Index up 0.1%, Swiss Market Index up 0.9%
• Bonds: German 10-year-yield unchanged at -0.1%, Italian 10-year-yield up 5bps at 1.22%, Spanish 10-year-yield up 2bps at 0.63%
• Credit: iTraxx Main up 0.3bps at 51.0, iTraxx Crossover up 0.9bps at 262.6
• FX: Euro spot up 0.28% at 1.159, Dollar index down 0.17% at 93.96
• Commodities: Brent crude up 1.0% at $84.5/bbl, copper up 0.6% at $9,553/MT, iron ore down 2.1% at $100.0/MT, gold up 0.5% at $1,791.91/oz

EUROPE EQUITIES

• 19 out of 20 Stoxx 600 sectors rise; telecoms sector has the biggest volume at 144% of its 30-day average; 429 Stoxx 600 members gain, 166 decline
• Top Stoxx 600 outperformers include: Bank Polska Kasa Opieki +6.2%, InPost +5.8%, Credit Suisse Group +5.6%, CTS Eventim AG & +5.6%, GN Store Nord +5.4%
• Top Stoxx 600 underperformers include: Darktrace -15.1%, Pandora -5.8%, Worldline SA/France -3.5%, Vitrolife -3.0%, Barratt Developments -2.9%
• For a daily wrap highlighting the biggest movers among EMEA stocks, click here
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