Europe: Stocks kick off 2022 at record highs

[BENGALURU] European shares ended at all-time highs on Monday, starting the year in an upbeat mood on hopes of steady economic recovery despite a surge in Covid-19 cases due to the Omicron variant.

The pan-European Stoxx 600 index ended 0.5 per cent higher at a record close of 489.99 points.

The benchmark surged 22.4 per cent in 2021, its second-best yearly performance since 2009, as economic stimulus measures, earnings growth and vaccine rollouts encouraged investors to pour money into the stock market.

"Although Covid-19 variants permeated the global economy, 2021 was the year of records with many bourses closing at or near record highs, while inflows into equities surpassed their largest accumulation ever (S$1.26 trillion)," said Sean Darby, global equity strategist at Jefferies.

"Peering into 2022, we expect volatility to rise."

Stock indexes in Germany, France, Italy and Spain were up between 0.5 per cent and 1.4 per cent, while London markets were closed.

Automakers led gains among European sectors with a 2.4 per cent rise, following a slew of positive production reports and annual targets from global vehicle makers, including Hyundai and Tesla.

Banking stocks gained 0.9 per cent, tracking a rise in euro zone government bond yields. They were the best performing European sector in 2021, as a surge in inflation pushed traders to price in faster monetary policy tightening across the globe.

Planemaker Airbus rose 3.4 per cent after sources said it had provisionally exceeded its target of 600 jet deliveries in 2021.

Lufthansa jumped 8.9 per cent after Citi upgraded the stock to "buy" from "sell", expecting the German airlines to benefit from the reopening of Asian routes, particularly China.

Air France KLM gained 4.9 per cent as the brokerage upgraded the stock to "neutral".

A survey showed factory activity in the euro zone remained resilient in December, as factories took advantage of supply chain issues easing and stocked up on raw materials at a record pace.

While coronavirus cases saw a rapid increase in several parts of the world, investors were largely relieved by signs the Omicron variant is milder than the Delta one.

Italian truckmaker Iveco Group plunged 10.2 per cent in its first day of trading on the Milan bourse, after it was spun off from CNH Industrial.

REUTERS