European stocks rise after upbeat forecast from Volkswagen spurs rally
AstraZeneca boosted by comments from European Medicine Agency
The S&P 500 index hit an all-time high on Wall Street on Tuesday. Photographer: Michael Nagle/Bloomberg
European stocks rose on Tuesday as an upbeat forecast from German carmaker Volkswagen prompted a rally in the automobiles sector, while investors awaited the US Federal Reserve’s views on a recent pick-up in inflation.
The pan-European Stoxx 600 index rose 0.9 per cent, inching closer to a record peak set last year, while the regional autos sector jumped 2.1 per cent to its highest level since June 2018.
Bank of Ireland climbed to €4.04 as its UK subsidiary announced a 70 per cent decline in underlying profit for 2020 – the result of the pandemic. Bank of Ireland UK said it was embarking on a multi-year restructuring plan to streamline the business, which included the closure of 15 branches in Northern Ireland.
Cairn Homes fell 3.6 per cent to €1.06 amid mixed messages from Government as to whether restrictions on construction will be lifted next month. The construction sector here is only 40 per cent operational amid a ban on all but essential construction to curb the spread of coronavirus.
Ryanair rose 2 per cent to €16.95 as oil prices declined while Flutter, which owns Paddy Power, traded flat at €196.35 as the Cheltenham racing festival got underway. Smurfit Kappa was up 2.2 per cent at €39.46.
London’s FTSE 100 rose following a clutch of upbeat company earnings, while AstraZeneca rose 3.6 per cent after the European medicine watchdog said it saw little reason to change its stance on the drugmaker’s Covid-19 vaccine.
The blue-chip FTSE 100 index ended 0.8 per cent higher at its best close since early January, with financials, healthcare and consumer staples stocks among the best performers.
Meanwhile, brokerage UBS in a note said it remained bullish on UK equities and raised its FTSE 100 year-end target from 7,200 to 7,600, a 17.6 per cent premium to its 2020 close. The energy sector was the main laggard, as lower oil prices resulted in losses in oil heavyweights BP and Royal Dutch Shell .
German car manufacturer Volkswagen jumped 6.7 per cent after it said it was confident that cost cuts will help improve profit margins in the coming years.
Deutsche Bank slashed 2021 economic growth forecasts for the euro area by a percentage point, citing spillover of the ongoing pandemic-linked activity curbs, but raised predictions for Britain, the US and India.
German online fashion label Zalando rose 5 per cent after it forecast 2021 revenue growth above market expectations following a strong start to the year. French telecoms operator Iliad jumped almost 4.5 per cent after saying it aimed to turn a core profit for its Italian business in the second half of this year. German biotech firm Morphosys slumped 10.6 per cent to the bottom of Stoxx 600 after forecasting a fall in 2021 revenue.
The S&P 500 hit an all-time high, while the Nasdaq jumped about 1 per cent as technology stocks caught a bid ahead of the Federal Reserve’s two-day policy meeting.
The Nasdaq was at a two-week high extending a rebound in tech-related stocks that were at the heart of February’s selloff. The index is now about 4 per cent below its February 12th record closing high.
Apple rose 2 per cent as Evercore ISI hiked its price target on the iPhone maker’s shares to the highest on Wall Street. Other mega-cap stocks including Facebook, Netflix, Alphabet and Microsoft rose between 2 per cent and 2.7 per cent.
The Dow slipped after notching sixth consecutive intraday record highs as optimism over a $1.9 trillion fiscal stimulus package and ongoing vaccination drives bolstered views that the economy was on a path to recovery.
– Additional reporting: Reuters