EUROPEAN shares closed at record high levels on Tuesday, with financials stocks in the spotlight following upbeat earnings from Switzerland’s UBS and Italy’s UniCredit, while optimism around interest rate cuts also helped.
The pan-European Stoxx 600 was up 1.1 per cent, also clinching its best day in over three months, while a market fear gauge dropped to over a month’s low.
The financials sector rose 2.5 per cent, boosted by a 7.6 per cent jump in UBS, after the lender’s first quarterly profit since taking over Credit Suisse, was three times analysts’ expectations.
UniCredit, Italy’s second-largest bank, gained 3.6 per cent to a 13-year peak, steering the banks’ index 2.3 per cent higher, as it raised its investor reward guidance after posting a much higher-than-expected profit and boosting capital levels.
Spain’s main index rose 1.5 per cent, with BBVA up 3.6 per cent after Sabadell rejected the country’s second biggest lender’s takeover proposal.
Following a rough patch in April during which the main index lost over 1.5 per cent, the Stoxx recovery has gathered steam over the past three sessions, but is still lagging its peers in the US.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
“Inflation is normalising and earnings are starting to pick up again, all at a time when valuations both in absolute terms, and relative to history, and against the United States, is still fairly low,” said Maximilian Kunkel, chief investment officer for Global Family & Institutional Wealth at UBS.
On the day, Germany’s DAX surged 1.4 per cent, driven by a 12.9 per cent jump in chip manufacturer Infineon after better-than-expected second-quarter sales, with analysts expecting long-term growth despite a full-year guidance cut.
Further, spirits makers Remy Cointreau and Pernod Ricard jumped 5 per cent and 3 per cent, respectively, after Chinese President Xi Jinping’s “open attitude” towards a trade dispute over French cognac.
The retail sub-index also rose 1.4 per cent as Germany’s Zalando gained 8.5 per cent after delivering a better-than-expected first-quarter operating profit.
On the flip side, German software developer TeamViewer dropped 8.1 per cent after a first-quarter results miss, while Danish medical equipment maker Coloplast fell 3.5 per cent after a second-quarter earnings miss.
Germany’s Fresenius Medical Care shed 5.5 per cent after only maintaining its 2024 profit outlook despite a first-quarter operating earnings beat.
Elsewhere, Britain’s FTSE 100 hit a record high of 8,335.68 points, up 1.2 per cent, boosted by a 1.3 per cent gain in Shell after Reuters reported its plans to sell the Malaysian gas station business.
Bundesbank President Joachim Nagel said deep structural changes in the euro zone economy could put upward pressure on inflation for years to come but the European Central Bank should still not tolerate quicker price growth. REUTERS
