LONDON, July 25 — European stock markets hit a one year high today, as strong reports from drugmaker Roche, brewer AB Inbev and luxury goods house LVMH stood out in a torrent of earnings, ahead of a highly-anticipated European Central Bank rate decision.
The ECB is all but certain to ease policy further today, but whether it staggers its moves over several months or tops market expectations and opts for a big bang will be crucial for investors’ immediate reaction.
The pan-European main stocks index STOXX 600 rose 0.4 per cent by 0800 GMT with Paris’s main index leading gains, powered by Louis Vuitton owner LVMH and other luxury stocks including Hermes and Kering.
Italian down jackets-maker Moncler gained around three per cent.
Expectations of easier monetary policy have spurred a rally in stocks globally since steep falls in May, but some analysts warn it may now be difficult for the ECB — and the Federal Reserve next week — to top what investors have already priced in.
The ECB’s decision is due at 1145GMT, with President Mario Draghi due to speak at 1230GMT.
“Today we are only going to get more dovish talks but it will be the last time that they will be able to get away with just more dovish communication before they have to act,” said Bert Colijn, senior eurozone economist at ING in Amsterdam.
“I expect that it would be September action (on rates).”
The latest business surveys yesterday showed the European economy struggling, and German manufacturing contracting, but in part thanks to a cut in analysts’ forecasts for earnings, many companies have already managed to beat expectations.
Shares of the world’s largest brewer Anheuser-Busch InBev rose 4.3 per cent after it reported the fastest beer sales growth in five years while drugmakers Roche and AstraZeneca both gained on improved sales outlooks.
The healthcare sector saw the biggest percentage gain, up 1.1 per cent.
Auto stocks index, among the biggest movers this year given their exposure to trade issues and a slowdown in China, gave up gains after Japan’s Nissan Motor Co reported a near wipe out in its first-quarter profit and said it would slash 12,500 jobs globally.
Bucking the trend was car parts maker Valeo SA which rose 1.1 per cent as it confirmed full year goals.
London-listed shares of consumer goods giant Unilever Plc, slipped 1.2 per cent after it posted a slightly weaker-than-expected quarterly underlying sales growth, hit by wet weather in Europe.
Defence and aerospace group Cobham topped the STOXX 600 with a 35 per cent surge after US private equity group Advent International agreed to buy it for £4 billion (RM20.5 billion). — Reuters
