European stocks at two-week high as US election lifts investor spirits
Fresh stimulus for UK economy and strong quarterly earnings boost trading
Traders working in the Frankfurt Stock Exchange. A handful of upbeat corporate results lifted European markets. Photograph: Thorsten Wagner/Bloomberg
European stocks hit a more than two-week high on Thursday as strong quarterly earnings, fresh stimulus for Britain’s coronavirus-hit economy and post-election gains for Wall Street lifted investor spirits.
The pan-European Stoxx 600 index gained 1.1 per cent to touch its highest level since October 19th, and was on track for its best weekly showing in more than six months. Technology stocks jumped 2.5 per cent, as did their US peers, but gains were broad-based in Europe with media, automakers and chemical companies surging over 2 per cent.
While the outcome of the US presidential election is still unclear, Democratic challenger Joe Biden was edging closer to victory over Republican president Donald Trump, who has alleged voting fraud, filed lawsuits and called for at least one state recount. Investors were counting on Republicans to maintain control of the US Senate, which dims prospects for a large new stimulus package but makes it harder to enact tighter regulation or raise corporate taxes on American firms.
“From a market perspective, the uncertainty we are seeing does little to hurt sentiment, with the prospect of a split Congress limiting the possibility of higher taxes under Biden,” Joshua Mahony, senior market analyst at IG, said in a note.
The Iseq rose 0.7 per cent to 6,779, roughly tracking a more buoyant market mood in general. Insulation specialist Kingspan was one of the main movers, jumping 5 per cent to €82.45, tracking market moves in the US, where it has substantial operations.
Swiss-Irish food group Aryzta rose 7 per cent to 49 cent as activist shareholders pressed for more boardroom overhaul.
Iseq heavyweight Ryanair fell 1 per cent to €13.14 after rival Lufthansa warned on Thursday it would burn through more cash in the fourth quarter than in the third, and that further restructuring measures will weigh on its results as it struggles to cope with the effects of the Covid-19 pandemic.
The two main financials Bank of Ireland and AIB had a mixed day. Bank of Ireland fell 0.7 per cent, while its rival rose by the same margin.
London stocks rose on Thursday after the government and Bank of England both ramped up stimulus programmes to cushion the struggling economy as England goes into a second national lockdown.
The blue-chip FTSE 100 index closed 0.4 per cent up, with shares in insurer RSA Insurance Group surging 45.7 per cent after it reported a rise in underwriting profit and said pandemic-related exclusions would limit lockdown impacts.
The domestically focused mid-cap FTSE 250 ended 0.7 per cent higher after finance minister Rishi Sunak extended the government’s costly coronavirus furlough scheme until the end of March and announced billions of pounds in other forms of support. Earlier on Thursday the Bank of England expanded further its already huge asset purchase programme.
Auto distributor Inchcape jumped 6.6 per cent after a beat-and-raise quarter, while Trainline jumped 12.5 per cent as JP Morgan upgraded the stock to “overweight” after first-half results.
A handful of upbeat corporate results also lifted European markets, with Munich-based broadcaster ProSiebenSat.1 Media jumping 8.9 per cent after it returned to profit in the third quarter and reinstated its outlook for the full year.
French lender Societe Generale gained 3.7 per cent after a recovery in its equity trading business helped it swing back to a quarterly profit.
Wind turbine maker Siemens Gamesa, which would benefit from Biden’s clean energy push, rose 5.1 per cent after it confirmed forecasts for a steady rise in margins until 2023. Its shares, along with those of rival Vestas, took a hit on Wednesday amid uncertainty over the US election outcome.
Dutch bank ING Groep fell 4.8 per cent after reporting lower-than-expected pre-tax profit. Germany’s Commerzbank dropped 5.8 per cent after it reported a quarterly loss.
US stocks jumped as bets on Republicans retaining control of the Senate eased worries of major policy changes that could hurt corporate America under a Biden White House, even as the presidential election hung in the balance. With counting continuing in the battleground states still to be declared, investors were abandoning cautious positioning that many took ahead of the election, driving all of Wall Street’s main indexes up by around 2 per cent.
The tech-heavy Nasdaq, packed with “stay-at-home” corporate winners under this year’s lockdowns, gained 2.4 per cent and was within striking distance of it September 2nd record closing high.
The Philadelphia SE semiconductor index surged 3.9 per cent to hit its own all-time high, while technology and communication services led gainers among S&P indexes. Qualcomm surged 13 per cent after the chipmaker forecast fiscal first-quarter revenue above estimates as it predicted solid growth in 5G smart phones sales next year. – Additional reporting by Reuters