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Europe stocks post second consecutive week of gains

by Jonathan Adams
Europe stocks

A series of mergers and acquisitions lifted regional markets

European stocks posted a second consecutive week of gains yesterday as bumper forecasts from Denmark’s Pandora and Novo Nordisk set a brighter tone for the earnings season.

The STOXX 600 index ended up 0.6 per cent to close the week with a gain of 2.1 per cent.

In Europe, a string of mergers and acquisitions as well as a rebound in beaten-down sectors like travel & leisure, banks and oil & gas lifted regional markets.

Shares of aircraft engine maker Rolls Royce have almost doubled in value since Monday, while British Airways owner-IAG jumped 13.2 per cent.

Jewellery maker Pandora rose 17.2 per cent to the top of STOXX 600 yesterday after hiking its profit guidance on stronger sales and a big boost to its online business.

Drugmaker Novo Nordisk gained 3.3 per cent after raising its 2020 sales and operating outlook.

German online fashion company Zalando rose 3.2 per cent and Global Fashion Group surged 24.0 per cent after upgrading their earnings outlook.

Companies on the STOXX 600 are expected to post a profit decline of 38 per cent in third quarter and 22.7 per cent in the current quarter, according to Refinitiv data, as businesses recoup from the coronavirus-driven hit.

Even though we’ve had rising infection rates in developed markets for the best part of the month, there hasn’t been any negative impact on consensus earnings forecasts, said Alastair George, head strategist at Edison Investment Research.

As long as strict lockdowns can be avoided, equities are likely to continue to make progress on the back of very loose monetary policy and global stimulus packages as well, he said.

Europe surpassed 100,000 daily reported Covid-19 cases for the first time on Thursday, after countries such as Russia and United Kingdom saw no respite in the mounting number of infections every day in the past five days.

However, UK stocks got a boost as British finance minister Rishi Sunak announced his latest programme to try to stave off a surge in unemployment.

Euronext declined 4.4 per cent after hitting a record high last week. London Stock Exchange accepted a $5.12 billion cash offer from the pan-European bourse operator for the Milan stock exchange.

German chemicals group BASF fell 3.8 per cent as it slashed its outlook after heavy writeoffs in third quarter.

Important
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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