Europe: Shares stalk record high as factory activity perks up

[BENGALURU] European stocks ended a hair's breadth away from a record high on Thursday as strong factory activity data out of the euro zone and optimism around a new US government spending plan eclipsed concerns about another lockdown in France.

The pan-European Stoxx 600 index was up 0.7 per cent at 432.22 points, about a point away from its all-time high. Its US counterparts have already recaptured all their coronavirus-driven losses from last year.

The German DAX climbed 0.7 per cent to hit an all-time high, while the UK's FTSE 100 gained 0.4 per cent as data showed euro zone factory activity growth galloped at its fastest pace in the near 24-year history of a leading business survey in March.

"A synchronised global recovery is expected to come through pretty strongly as we go through unlocking Europe in the next few months," said Jonathan Stubbs, equity strategist at Berenberg.

"The earnings recovery story looks pretty well underpinned.

My forecasts suggest 25 per cent-30 per cent earnings growth across Europe this year and next year combined. It's a pretty punchy recovery." The Stoxx 600 index had ended the first quarter on Wednesday with a 7.7 per cent rise - its fourth straight quarter of gains. But it took the benchmark index seven months more than the US S&P 500 to reclaim its pre-pandemic high, slowed down by a sluggish vaccination roll-out and a new wave of infections.

President Emmanuel Macron ordered France into its third national lockdown, but the French blue-chip index 0.6 per cent rose after a sluggish start.

Buoying global sentiment further, US President Joe Biden unveiled a sweeping US$2.3 trillion spending plan on Wednesday that includes investments in roads, railways, broadband, clean energy and semiconductor manufacture.

Chip stocks including ASML, ASMI, Infineon Technologies and BE Semiconductor all rose between 1.2 per cent and 3.6 per cent after US chipmaker Micron Technology issued an upbeat revenue forecast.

Also boosting the sector, contract chipmaker TSMC said it plans to invest US$100 billion over the next three years to increase capacity at its plants.

British food delivery firm Deliveroo's shares fell 1.9 per cent after plunging by as much as 30 per cent in their trading debut on Wednesday.

German peer Delivery Hero jumped 3.9 per cent after Dutch tech investment company Prosus NV raised its stake in the company.

Catering companies Sodexo and Elior slipped even as Sodexo forecast an expansion of second-half revenue after reporting a large beat on its first-half profit margin.

Swiss lender Credit Suisse rose 2.6 per cent, but was on track for its worst week since March 2020, hit by worries about the fall-out from Archegos Capital's dramatic meltdown.

REUTERS

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