In the seven months of Friday, European equities aimed for the best weekly performance. This is because the bright start of the earnings season has helped ease investors’ concerns about rising inflation.
The Pan-European STOXX 600 index rose 0.3% and was expected to end the week with a rise of more than 2% after a sharp recovery in risk appetite in the last two sessions.
Banks were the top winners in Europe, up 1.4%, after a quarterly result that exceeded expectations on Thursday from four of Wall Street’s largest lenders with economic recovery and great trading success.
Retailers, oil and gas, and travel all rose between 0.9% and 1.1%, while defense businesses fell the most.
“A new focus on bottom-up news has helped global equities in the last few sessions, and results in the US banking sector have significantly boosted the index overnight,” said Ian Williams, an analyst at Peelhunt. I pushed it up. “
European banks are trading near pre-pandemic highs, while US banks have recently surged to highs.
Analysts expect third-quarter profits of STOXX 600-listed companies to increase by nearly 47%, according to Refinitiv IBES data, and European earnings will skyrocket in the coming weeks. Energy and industrial companies are projected to provide the greatest boost to revenue performance.
European Central Bank Governor Christine Lagarde said rising inflation in Europe is still seen as temporary and there are no signs that the recent surge will be incorporated into wages.
Investors have been plagued by rising inflation caused by the global energy crisis, supply chain bottlenecks, and labor shortages that slow the recovery of corporate profits from the pandemic shock.
“China’s slowing growth and global inflation concerns could bring headwinds to risk assets,” said Aaron Louis, an analyst at Citi. “World equities may be under pressure in the coming months.”
Rio Tinto’s UK-listed stock fell 1.4% after Australian miners cut their 2021 iron ore shipment forecast due to tight labor markets. Meanwhile, Swiss banking software company Temenos fell 12.8% as a result.
German fashion retailer Hugo Boss rose 2.1% after raising its outlook this year after a recovery in third-quarter earnings against the backdrop of strong demand in Europe and the Americas.
French cloud computing services company OVHCloud rose 4.5% on its debut on the Paris stock market.
By Sruthi Shankar
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