European Stocks Hit New Record as Rally Weathers Growth Risks
European Stocks Hit New Record as Rally Weathers Growth Risks
(Bloomberg) -- European stocks pulled ahead to a fresh record as optimism over a robust profit outlook offset worries about inflation and growth.
The Stoxx 600 Index was up 0.4% by the close in London. Retailers and utilities rallied, while miners declined with metals prices as Chinese steel production tumbled. BNP Paribas SA jumped after it was said to be considering a sale of its U.S. arm Bank of the West. Royal Dutch Shell gained after the oil and gas company said it plans to simplify its structure.
Accommodative central banks and a strong results season have helped push European equities to fresh peaks, outweighing worries about a supply crunch and cost inflation.
Hani Redha, a portfolio manager at PineBridge Investments, said that he has been reducing risk into what he sees as the final leg of the rally.
“The reversal of the Delta wave gives us a boost, but it’s really not likely to last, because we’ve kind of exhausted the engines of super strong growth,” Redha said by phone. “Growth will still be positive, it will still be pretty strong, but it’s definitely decelerating.”
As attention turns to next year, Morgan Stanley strategists are positive on European equities for 2022 and see better returns in the region than in the U.S.
Investors are also continuing to watch Covid-19 developments that may threaten the growth recovery. The Austrian region with the highest coronavirus infection rate plans to impose a lockdown for unvaccinated people.
Richemont Surges, Wise Sinks on MSCI Review: EMEA Equity Movers
Among other notable movers on Monday, Remy Cointreau SA rose after Barclays upgraded the French distiller, while Avast Plc surged after NortonLifeLock Inc.’s offer for the company cleared a U.S. merger review.
Banco Bilbao Vizcaya Argentaria SA slid after seeking to take full control of its Turkish unit. Dutch tea and coffee maker JDE Peet’s NV dropped after Jefferies cut its price target on the stock to a Street-low.
Royal Philips NV slumped 11%, the most since 2009, after U.S. regulators asked for more tests on a silicone foam designed to fix the company’s recalled sleep and breathing devices.
MARKETS
- Equities: Euro Stoxx 50 up 0.4%, FTSE 100 up 0.1%, DAX up 0.3%, CAC 40 up 0.5%, FTSEMIB up 0.5%, IBEX 35 up 0.2%, AEX-Index up 0.4%, Swiss Market Index unchanged
- Bonds: German 10-year-yield up 1bps at -0.24%, Italian 10-year-yield up 3bps at 0.99%, Spanish 10-year-yield up 2bps at 0.48%
- Credit: iTraxx Main up 0.2bps at 48.9, iTraxx Crossover unchanged at 248.4
- FX: Euro spot down 0.22% at 1.142, Dollar index up 0.07% at 95.2
- Commodities: Brent crude down 1.1% at $81.2/bbl, copper down 0.3% at $9,686/MT, iron ore down 0.6% at $91.56/MT, gold down 0.1% at $1,863.67/oz
EUROPE EQUITIES
- 16 out of 20 Stoxx 600 sectors rise; telecoms sector has the biggest volume at 133% of its 30-day average; 344 Stoxx 600 members gain, 240 decline
- Top Stoxx 600 outperformers include: Avast +7.1%, Auto1 Group +5.7%, ams +4.4%, Zalando +4.3%, Electrolux +4.1%
- Top Stoxx 600 underperformers include: Koninklijke Philips -10.6%, Sonova Holding -5.8%, Banco Bilbao Vizcaya Argentaria -4.3%, KGHM Polska Miedz -3.9%, Genmab -3.9%
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