(Bloomberg) — European stocks posted the best weekly performance since January after investors reacted positively to a deluge of earnings and key U.S. inflation data met estimates.
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The Stoxx 600 index extended its gains Friday to close the week up 1.7%. The Federal Reserve’s preferred core inflation gauge matched expectations, sparing traders the shock of another searing reading of price pressures. Almost all industrial groups were in the green.
The UK’s FTSE 100 index also recorded a bumper week, the best since September 2023.
Construction and materials led gains after Saint-Gobain Co. beat profit expectations. Mining prices rose after copper hit $10,000 a tonne for the first time in two years and as Anglo American rallied following news that activist hedge fund Elliott Investment Management had took a stake in the minor.
Separately, British cybersecurity company Darktrace Plc agreed to sell itself to Thoma Bravo for an equity value of approximately $5.32 billion.
“The auction bonanza for UK-listed companies continues, and it’s a constant reminder to global investors that, even with the FTSE 100 at a record high, UK stocks look cheap compared to their US cousins,” said Chris Beauchamp. chief market analyst at online trading platform IG. “At this point it almost seems like all the major UK stocks are up for grabs, so traders can hardly be blamed for their accumulation.”
Meanwhile, CVC Capital Partners Plc soared 17% as the private equity firm made its Amsterdam debut. Tech stocks got a boost after US mega-cap Microsoft Corp. and Google owner Alphabet Inc. beat Wall Street estimates. Chemistry stocks lagged after disappointing results from IMCD NV.
Investors reacted mostly positively to the deluge of profits this week. However, this year’s recovery slowed in April as investors worried about geopolitical risks and prolonged rising interest rates.
“Generally speaking, the European earnings season is going very well so far,” said Joachim Klement, strategist at Liberum. He noted particularly strong results in the financials and basic materials sectors. “A positive earnings season would support our view that stocks will reaccelerate and recover for the remainder of the year on the back of an improving economy in Europe and rate cuts,” he said. said.
Among other individual stocks, Airbus SE fell after first-quarter results fell significantly short of estimates. Natwest Group Plc gained after beating estimates as loans and deposits rose amid improving customer confidence. Amundi SA rebounded after the asset manager recorded inflows above analysts’ estimates. Thyssenkrupp AG jumped 11% after Czech billionaire Daniel Kretinsky’s EP Corporate Group agreed to buy a fifth of the German manufacturer’s struggling steel unit.
Meanwhile, at the ECB, Governing Council member Fabio Panetta warned that a return to ultra-low interest rates may be necessary if cuts are not made soon.
With inflation falling and the European economy struggling, ECB policymakers are set to cut rates for the first time since 2019. Whether further cuts will follow a planned first step for June, however, is a source of disagreement.
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US stock futures rise as Microsoft, Alphabet profits lift morale
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Anglo-American…Australian? : the London Rush
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–With help from Michael Msika.
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