European Stocks Set Ninth Record as Traders Mull Earnings, Risks
(Bloomberg) -- European stocks eked out a ninth straight record high as investors weighed earnings updates against risks to economic growth from the delta virus variant.
The Stoxx Europe 600 Index added 0.1% by the close in London, with automakers, insurance and telecoms leading the gains and mining stocks underperforming as iron ore futures dropped. Euro-area large-caps also climbed for the ninth day, with the Euro Stoxx 50 Index posting its second-longest winning streak in history and the longest since September 2018. And France’s CAC 40 is now about 0.6% away from a record high that it last reached in 2000.
READ: Delivery Hero Falls on Guidance, Aegon Gains: EMEA Equity Movers
Equities in the region have been grinding further into record territory during August, amid an earnings season marked by consensus-beating profits and guidance upgrades. The bulk of mid-year results has now been released, and anxiety over the next wave of coronavirus infections has returned to the fore in light of elevated equity valuations, along with the growth risks from China’s crackdown on business.
“Positive earnings are now absolutely factored in,” Equiti Capital market analyst David Madden said by phone. “Meanwhile, we’re always a few days away from a new headline on rising infections in Asia, so it feels a bit like roulette. With that, there’s some fear about buying into the market.”
Investors’ high expectations after a blowout earnings season were on display in European trading. Delivery Hero SE’s guidance upgrade was met with a 7.6% share decline, the biggest in nearly a year, as analysts focused on the narrowed margin outlook. Hearing aids maker Demant A/S slumped 3.7% despite consensus-beating results as Bernstein analysts noted the slowdown in growth. Orsted A/S retreated 4.2% after the world’s largest developer of offshore wind farms warned that low wind speeds may cut into this year’s profit.
At the same time, Deutsche Telekom AG climbed 2.8%, the most since March 10, after raising its profit guidance for the year as its U.S. unit drove a pickup in profit in the second quarter.
The insurance sector was one of the best performers today thanks to individual updates. Aviva Plc advanced 3.5%, the most since Feb. 3, after a surprise buyback announcement of plans to return at least 4 billion pounds ($5.6 billion) to investors. Peer Aegon NV’s stock jumped 7.3% after analysts called its second-quarter results “very strong.” Zurich Insurance Group AG gained after beating estimates.
Adidas AG added 1.6% after agreeing to sell its underperforming Reebok business to Authentic Brands Group Inc. for up to 2.1 billion euros.
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