European stocks rose after four days of decline as investors focused on the earnings season.
The Stoxx Europe 600 index added 0.6% at the close. The banks led the gains, with Barclays Plc and Nordea Bank Abp climbing to better-than-expected earnings. Energy stocks also outperformed.
European stocks are still down 1.4% for the week. Rising bets of Democrat Joe Biden’s victory in the Nov. 3 U.S. election have resulted in a rotation towards cyclical stocks and exiting defensive stocks as the new administration is expected to step up economic support measures.
A Guide to Trading European Markets Ahead of the US Elections
“Rising market expectations of a Democratic sweep are boosting reflation trade, but at the same time, Europe’s macroeconomic outlook looks more uncertain given the resurgence of Covid and the slow pace of political action,” Barclays Plc strategists led by Emmanuel Cau wrote on Friday.
Kering SA has driven retailers down after adisappointing quarterly performance of its Gucci brand.
Strategists at JPMorgan Chase & Co., led by Mislav Matejka, said in a note Friday that European companiesthe high earnings have beaten the rate so far. In Europe, they said third-quarter earnings per share growth was down, but surprised positively by 14%. Strategists added that earnings delivery for cyclical sectors, including industrials and discretionary sectors, has been “poor”, while defenses and tech are doing better.