European stocks gain on upbeat corporate newsflow

Concerns spike in coronavirus cases in Asia and the US will derail the global recovery

European shares have been trading in a tight range since mid-June.

European shares have been trading in a tight range since mid-June.

 

European stocks gained on Friday, boosted by upbeat corporate newsflow. They remain set for flat returns this week amid concerns that the spike in coronavirus cases in Asia and the US will derail the global recovery.

The Stoxx Europe 600 Index rose 0.7 per cent as of 12:10 p.m. in London, led by autos and technology stocks – helped by results from chipmaker TSMC. Energy shares lagged behind the other sectors amid worries over heightened risks to oil demand. All sectors but personal goods posted gains.

Record spikes in Covid-19 infections in Hong Kong and Tokyo have fuelled fears of a second wave hitting Asia, while Florida, Arizona, Texas and California reported deaths at record levels. The infection rate for the US topped the average.

“Bullish trends remain valid so far on most benchmarks, but this situation increases the likelihood of slightly less directional markets in the coming weeks as traders may wait for significant progress on the virus front to increase their exposure to riskier assets,” said Pierre Veyret, a technical analyst at ActivTrades.

European shares have been trading in a tight range since mid-June, as investors weighed the unprecedented central bank and government stimulus against the effect of the pandemic on the economy.

Caution ahead of the start of the second quarter earnings season, and rising virus infections in America have added to the worries.

“Despite ongoing volatility, we continue to suggest investors stick to their long-term strategic equity allocations, but react to the larger swings by frequently rebalancing,” says Richard Flynn, UK managing director at Charles Schwab.

“This allows portfolios to stay in gear by trimming into strength and adding into weakness, rather than trying to time short-term peaks and troughs.”

Among notable movers, Danish brewer Carlsberg A/S jumped 5.2 per cent after reporting preliminary earnings, while satellite communications provider SES SA surged after an upgrade from Goldman Sachs Group. – Boomberg