Strong earnings keep European indexes pinned near peaks

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(Businesshala) – European shares were trading near record highs on Tuesday, with strong corporate earnings support sentiment, while investors awaited fresh US inflation data for clues on the direction of interest rates.

FILE PHOTO: The German stock price index DAX graph is pictured on the stock exchange in Frankfurt, Germany, November 8, 2021. Businesshala / Staff

The pan-European STOXX 600 gained 0.1%, just below its record high last week.

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Auto shares took the biggest boost as Renault rose 4.5% on top of France’s CAC 40 after its Japanese alliance partner Nissan reported quarterly profit and raised its full-year forecast.

The STOXX 600 is in its ninth straight session of gains, with France’s CAC 40 and Germany’s DAX setting new records in the first week of this month on strong corporate earnings and a sluggish European Central Bank stance.

“The equity rally has been impressive,” said Ankit Ghedia, BNP Paribas’ Head of Equity and Derivatives Strategy for Europe.

“How long companies can keep profit margins high is going to be the leading indicator for the end of the bull market, and as of now, all indications suggest that profit margins should remain supported over the medium term.”

While upbeat earnings forecasts from Primark owner AB Foods supported British stocks, insurers were a drag on continental European markets. German conglomerate Munich Re collapsed after warnings of more COVID-related losses in its reinsurance business. [.L]

British insurer Direct Line also slipped 1.8% after reporting lower-than-expected growth in quarterly premiums.

German agricultural and pharmaceutical firm Bayer climbed 2.8%, after posting higher quarterly adjusted earnings that beat analysts’ forecasts.

French supermarket conglomerate Carrefour grew 1.0% after pledging 3 billion euros between 2022 and 2026 for its digital push.

Wall Street shares ended slightly higher on Monday as investors cheered the passage of the US infrastructure bill, but gains were limited by a cautious mood ahead of the release of inflation data on Wednesday. [MKTS/GLOB]

Polish e-commerce platform Allegro fell 5.9% after reiterating its 2021 targets, despite reporting quarterly profits.

Reporting by Anisha Sarkar in Bengaluru; Editing by Subhranshu Sahu and Anil D’Silva

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