EUROPEAN shares rose on Thursday (Feb 15) as upbeat corporate earnings pushed French and German stocks to a record high, while investors assessed comments by European Central Bank (ECB) president Christine Lagarde on the disinflation process in the eurozone.
France’s benchmark CAC 40 closed up 0.9 per cent, near its intra-day record high, with Renault the top gainer.
The carmaker’s shares jumped 6.5 per cent after it reported margin and revenue gains and a huge dividend increase. The move also pushed Europe’s automobile index to a near two-year high.
Also boosting the CAC 40 was a near 2 per cent gain in shares of Pernod Ricard as the spirits maker left its longer-term growth ambitions intact.
“In Europe, there is a quality theme. You want to stick with companies that are able to continue to have pricing power, good market share and good earnings,” said Karim Chedid, head of investment strategy for iShares EMEA at BlackRock, noting luxury as one of the preferred sectors.
Germany’s DAX also hit an intra-day record high, and ended up 0.6 per cent at a record closing high.
Commerzbank was the top performer on the index, up 5.5 per cent as the lender posted its biggest profit in 15 years in 2023 on a boost from higher interest rates.
The pan-European Stoxx 600 closed up 0.6 per cent at an over two-year high, with Goldman Sachs raising its 2024 target for the benchmark index to 510 points, representing about 5 per cent upside from current levels.
Investors drew positive inferences after Lagarde told a European parliament hearing in Brussels that recent economic data out of the eurozone indicated that inflation is heading back to the target as predicted.
The ECB has more room to cut interest rates than the Federal Reserve or the Bank of England (BOE) because of lower signs of persistent inflationary pressures, Chedid added.
UK’s FTSE 100 also gained 0.4 per cent as data showed Britain’s economy entered a recession in the second half of 2023, fuelling bets that the BOE would ease its monetary policy.
Among individual movers, Stellantis rose 5.7 per cent after saying it would launch a share buyback programme worth three billion euros this year.
Temenos shares plunged 28.2 per cent after Hindenburg Research said it had taken a short position in the Swiss software firm. The Six Swiss exchange later suspended trading of shares on request of the company.
Shares of Tomra jumped 30.9 per cent, while Fortnox soared 20.1 per cent after both companies posted fourth-quarter results above expectations. REUTERS
