Europe: Energy heavyweights push shares higher; Germany’s DAX hits fresh record high
EUROPEAN stocks advanced on Tuesday (Feb 6) as bumper earnings from BP and higher crude prices propelled energy giants higher, while investors took comfort from fresh stimulus for China’s battered financial markets.
The pan-European Stoxx 600 index closed 0.7 per cent higher, with the energy index leading the charge, up 2.1 per cent, tracking an advance in crude oil prices.
London-listed oil giant BP climbed 5.5 per cent after reporting better-than-expected fourth-quarter earnings and accelerating the pace of its share repurchases.
“There are also elements of strong comparatives, particularly in the fourth quarter numbers, when the oil price significantly spiked following Russia’s invasion of Ukraine,” Richard Hunter, head of markets at Interactive Investor said.
“Even so, BP is well prepared as a business to withstand the cyclical trials which follows a wavering price.”
China-exposed miners also added 1.4 per cent amid renewed talks of official support from Chinese authorities, while industrials also gained 1.4 per cent.
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Germany’s DAX index notched a fresh record high, ending 0.8 per cent higher, lifted by a 3.2 per cent jump in Siemens Energy.
Acting as a catalyst to gains, yields on government bonds across the continent took a breather, with the yield on the benchmark 10-year German note last at 2.291 per cent.
Still, there was an element of caution after Federal Reserve chair Jerome Powell pushed back firmly against speculation of imminent rate cuts, prompting investors to reassess the trajectory of rates this year.
European stocks reached a two-year high last week, helped by earnings and gains in technology stocks on optimism about artificial intelligence, but strong US data and cautious comments from central bank policymakers have stalled the rally.
Of the 85 Stoxx 600 companies that have reported earnings for the fourth quarter so far, 55.3 per cent have beaten analyst estimates, LSEG data showed.
On the downside, Swiss lender UBS would restart share buybacks and find US$3 billion more in cost savings from integrating Credit Suisse. Its shares, however, dropped 4.4 per cent with analysts pointing to slightly lower-than-expected profitability targets.
Italian pump manufacturer Interpump lost 6.9 per cent after brokerage Equita trimmed its estimates and price target on the stock.
Norwegian fabless chipmaker Nordic Semiconductor slumped 22.3 per cent after it warned of low revenue into 2024 due to Internet of Things sector headwinds.
Meanwhile, investors also appeared to shrug off a reading that showed German industrial orders unexpectedly jumped in December, driven by “an exceptionally” high number of aircraft orders. A separate European Central Bank (ECB) poll showed consumers have trimmed their expectations for inflation over the next 12 months, in a sign the ECB’s credit-tightening efforts are having an impact. REUTERS
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