European Stocks Pause Record Rally as Focus Shifts to Earnings
(Bloomberg) -- European stocks retreated from a record high as investors eyed the upcoming earnings season for signs of the strength of economic growth, while M&A news supported individual shares.
The Stoxx 600 Index closed down 0.5% in London, with the U.K.’s FTSE 100 Index falling 0.4%, even as lockdown measures eased in England. Technology, travel and miners were among the biggest decliners.
European stocks have made fresh headway in April, touching a series of record highs as investors bet on an economic recovery, for which the upcoming earnings season will prove to be a crucial test. At the same time, investors are mulling whether the relatively slow vaccine push in continental Europe and prolonged lockdowns risk becoming an obstacle for the market rally.
Hani Redha, a portfolio manager at PineBridge Investments, said the timetable for the vaccine rollout in Europe is still good, and the region’s stocks are starting to price in an inflection point in the second half.
“I’ve felt that the weather makes a big difference with this virus and the kind of activities we can continue with and how much economic movement there can be,” Redha said by phone. “As long as we can get our act together and hit targets before next winter, I think that we’re going to be okay.”
Strategists at Goldman Sachs Group Inc. were also positive on the prospects for European equities, raising their 12-month target for the Stoxx 600 Index to 470 from 450 points, implying 7.5% of upside from Friday’s close, citing an accelerating vaccine rollout and confidence in better growth.
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