LONDON, March 2 ― European shares rose to five-month highs yesterday, starting the month on a strong footing, as a fresh batch of corporate updates fuelled risk appetite, even after US President Donald Trump raised some concerns over trade talks with China.
The pan-regional STOXX 600 index closed up 0.4 per cent after hitting its highest since October 8 earlier in the session.
“Momentum has flagged slightly in recent sessions and concrete news of an agreement between the US and China is now needed to prolong the rally in risk assets,” wrote Peel Hunt analyst Ian Williams. In the meantime it was up to corporate earnings to maintain morale, he added.
Gains spread across all regional bourses with Germany's exporter-heavy DAX leading the charge thanks notably to rising car makers stocks.
“If corporate profits do grow, which I think they will, equities look reasonably good value,” said Edward Rumble, European equity portfolio manager at RWC Partners.
The Dublin bourse was up 1.3 per cent, outperforming its European peers as worries that Britain will crash out of the European Union without a deal at the end of this month eased. The market is often seen as a barometer for Brexit sentiment.
The optimism on markets came despite mixed news from economic indicators.
Data showed euro-zone manufacturing activity went into reverse for the first time in more than five years, but German retail sales jumped and the bloc's powerhouse unemployment remained at record lows.
Still, the market pared some of its earlier gains in the afternoon after data showed February US manufacturing activity dropped to its lowest since November 2016.
“Fridays have been good days for markets of late, and investors are hoping that the same trick will be repeated today, with some 'first day of the month' inflows helping as well,” said Chris Beauchamp, chief market analyst at IG.
“However, optimism has been dampened by a poor run of US data, with the ISM manufacturing PMI and personal spending both weaker, plus a downward revision to consumer confidence.”
Among individual moves, Italian luxury group Moncler stole the spotlight, rising 11.1 per cent for its best day since January 2014 after its 2018 results, which broker Jefferies called “remarkable”.
Moncler peer benefited from the rally with Gucci owner Kering up 3.2 per cent, LVMH up 1.5 per cent and Burberry rose 3.1 per cent.
Britain's WPP, the world's biggest advertising company, rose 4.9 per cent after its full-year results came as a relief amid fears the industry is facing structural headwinds.
Investors have been cautious about the company since French rival Publicis earlier this month results alarmed the market.
Rheinmetall was the second-best performer on the STOXX 600, rising 9.9 per cent after its profits surge.
Among financials, Jupiter Fund Management was another big gainer, up 7.1 per cent after its dividend beat estimates.
“The company paid out 90 per cent of underlying earnings, driving the beat,” write KBW analysts.
It was a different story for hedge fund manager Man Group which lost 2.6 per cent after reporting funds under management fell last year.
RELX sank 6.9 per cent to the bottom of the FTSE 100, for its worst daily performance in almost a decade, after the University of California cancelled its contract with the company's Elsevier publishing arm.
Liberum analysts said the deal loss won't have a material impact on earnings in the short term.
But it will reignite concerns about the concept of “open access”, which the university says should mean research should be freely available to the public and not behind a paywall. ― Reuters
