European stocks rebound as banks, autos rally

The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, March 21, 2018. — Reuters pic
The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, March 21, 2018. — Reuters pic

BERLIN, Oct 23 — European stocks rose today, boosted by positive earnings updates from Barclays and carmakers, but nagging worries about the economic impact of surging Covid-19 cases put markets on course for their biggest weekly decline in a month.

The pan-European STOXX 600 index advanced 0.9 per cent, with London’s FTSE 100 outperforming its European peers after Barclays jumped 5.6 per cent on strong results.

Carmaker Daimler rose 2.3 per cent as it raised its 2020 profit outlook after a 24 per cent jump in demand for luxury cars in China in the third quarter.

Sectors considered more economically sensitive such as banks, automakers and oil & gas found favour. European lenders were on course for their best monthly performance in over a year.

“Opposite forces are in play at the moment,” said Emmanuel Cau, head of European equity strategy at Barclays. “Globally you’ve these two main sources of growth — US and China — that are still recovering, so part of European market will still benefit from the strength outside of Europe.”

“But the domestic part of the market exposed to mobility and restrictions are impacted by the second wave.”

Indicating this trend, IHS Markit’s survey of purchasing managers showed German manufacturing sector expanded at a faster rate in October, but services activity shrank, suggesting Europe’s largest economy is operating at two speeds.

The broader euro zone economic activity slipped back into decline this month.

Meanwhile, the mood in global markets was that of caution with less than two weeks to go before the US presidential election.

France looked set to widen a curfew to more than two-thirds of its population after the country set an all-time daily high of new coronavirus cases on Thursday.

Finance Minister Bruno Le Maire said the GDP will likely contract in the fourth quarter, adding that curfew measures would cost around €2 billion (RM9.8 billion).

France’s Renault gained 2.3 per cent after saying it should have positive cash flow from cars by the end of 2020 as sales recovered.

Luxury group Kering fell 2 per cent as its star Gucci brand underperformed rivals.

Holiday Inn-owner InterContinental Hotels slipped 0.7 per cent as it posted a 53.4 per cent fall in quarterly revenue per available room. — Reuters

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