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[LONDON] Germany's top share index hit a new high for 2016 on Tuesday as European shares advanced for a fifth straight session, boosted by new highs on Wall Street and strong results from companies like Munich Re.
Germany's DAX closed up 2.5 per cent, having hit 10,701.33, its highest level since the last trading day of 2015.
The index is up 16 per cent from its June low and 23 per cent from a trough hit in February, meaning in technical terms it is in "bull market" territory.
The Stoxx Europe 600 was up 0.9 per cent, in positive territory for a fifth straight session. It is just 0.4 per cent away from regaining all of its losses made after Britain voted to leave the European Union on June 23.
Appetite for equities was also buoyed as the S&P 500 and Nasdaq both hit fresh record highs on Wall Street.
While the initial period following the Brexit vote was volatile, investors have since focussed on the prospect of continued easy monetary policy, with the Bank of England last week cutting interest rates for the first time in seven years.
"In the UK and the US, before this episode of Brexit, rates were quite high relative to the rest of the world. With another UK rate cut later in the year, you're looking at zero rates," Veronika Pechlaner, European equity fund manager at Ashburton, said.
"For the moment, this stimulus seems to have sparked risk assets into action."
Top riser on the German DAX was Munich Re, up 5.7 per cent after it said its fall in profit was smaller than expected and it was on track for its profit target.
Outside Germany, shares of the telecoms group Altice surged 14.9 per cent after the company said second-quarter core operating profit grew 2.7 per cent, beating forecasts in a Reuters poll, as its Portuguese and US businesses offset a decline in profitability at its subsidiary SFR.
However, SFR also rose 9.4 per cent, after the company said a price war in France's mobile market showed signs of easing .
Overall, the second-quarter earnings season has been encouraging so far. Of the 77 per cent of companies in the Stoxx Europe 600 index that have reported results, 61 per cent have met or beaten expectations, according to StarMine data.
"European earnings are surprising on the positive side, which is a confirmation of solid economic developments in Europe. However, the second half may not be as good due to uncertainties related to the Brexit and some other political issues in Europe," UniCredit strategist Christian Stocker said.
European banks seem to be stabilising, Mr Stocker said, as a lot of negatives were already priced in. He said he had a "neutral" stance on the sector.
The European banking index rose 1.1 per cent and Britain's leading banks index gained 1.3 per cent, recouping all the losses in sterling terms it suffered after the Brexit vote.
Gains on the UK index have largely been driven by HSBC Holdings and Standard Chartered. Both have large operations outside Britain, helping them outperform more domestically focused banks. Lloyds and Royal Bank of Scotland have lost nearly a quarter of their value since the referendum.
Among decliners, Legal & General fell 5.5 per cent on disappointing profits at L&G's investment management and general insurance businesses.
Danish jewellery maker Pandora dropped 4.2 per cent after its second-quarter profits came in below market consensus.