Europe: Shares notch fourth straight record high on earnings strength

[BENGALURU] European stocks ended at record highs on Thursday, as strong results from Novo Nordisk and Siemens helped outweigh weak mining stocks and losses in major German retailers whose earnings were hurt by Covid-related disruptions.

The pan-European STOXX 600 ended 0.4 per cent higher at a record high of 469.96 points, its fourth consecutive peak this week.

Danish company Novo Nordisk surged 5.2 per cent after it raised its full-year outlook and posted above-forecast quarterly earnings, while German industrial firm Siemens climbed 2.6 per cent as it lifted its profit forecast.

Mining stocks were the worst performers for the day, sinking 2.6 per cent as iron ore and base metal prices dropped on fears of slowing Chinese demand.

The retail sector fell 0.5 per cent, with Adidas down 6.0 per cent after Chinese sales were hit by a boycott of western brands, and rising Covid cases spurred the closure of factories in major supplier Vietnam.

Online fashion company Zalando fell 4.8 per cent after it said it had spent more on marketing to keep its customers shopping.

Still, Adidas, along with German industry bellwethers Siemens, Nivea-maker Beiersdorf, as well as pharma firms Bayer and Merck upgraded their forecasts for the current year, citing increasing consumer spending and economic activity.

European stocks have surged 1.8 per cent so far this week as a strong batch of earnings helped dispel concerns over rising cases of the highly contagious Delta variant of the coronavirus.

A steady vaccination programme is expected to bring about relative normalcy later this year and drive a rebound in economic growth.

"Equity markets seem to be a little bit vulnerable right now. There is the Delta variant, fears of tightening as well as peaking earnings growth. We cannot rule out a correction," said Frederique Carrier, head of investment strategy, RBC Wealth Management.

"But so long as there is no recession in sight, markets stand to recover. We continue to be constructive on equities."

Stronger-than-expected quarterly reports have led analysts to lift their projection to a near 140 per cent jump in second-quarter profit for companies listed on the STOXX 600, as per Refinitiv IBES data.

UK's blue-chip FTSE 100 slipped 0.1 per cent, while midcap stocks rose 0.7 per cent after the Bank of England outlined plans to wean the British economy off Covid-related stimulus measures.

French diagnostics firm Eurofins Scientific jumped 10.3 per cent to the top of the STOXX 600, after it announced a record first-half performance and upgraded its annual outlook.

Technology stocks continued their rally, ending 0.9 per cent higher at a more than 20-year high.

REUTERS