Europe: French stocks scale record highs to lift pan-European index

EUROPEAN shares rose on Thursday (Feb 16) as upbeat corporate earnings helped France’s blue-chip index touch a new record high, overshadowing worries about US interest rates staying elevated after further evidence of the country’s economic strength.

France’s CAC 40 index ended up 0.9 per cent at 7,366.16 points, after having scaled a new record high of 7,387.29 points during the day.

French stocks have risen nearly 13.8 per cent so far this year, following a battering in 2022, boosted by hopes that the eurozone will narrowly avoid a recession, as well as strength in shares of China-exposed luxury firms such as LVMH and Kering.

Germany’s industrials-heavy DAX index ended the day 0.2 per cent higher.

“The luxury sector has got a boost in the hope that China reopening will see a pickup in demand,” said Michael Hewson, chief market analyst at CMC Markets UK, adding that a fall in energy prices has also led to a brighter domestic outlook.

“These same factors have helped the automotive sector in the CAC 40 and the DAX.”

The pan-European Stoxx 600 index rose 0.2 per cent but retreated from a near one-year high hit earlier in the session after data showed US producer prices rose more than expected in January, spurring concerns that the Federal Reserve would stick to its rate hike campaign for longer.

“There is nothing here to suggest the Fed will be adopting a more dovish tone any time soon,” said Stuart Cole, macroeconomist at Equiti Capital.

In the eurozone, price pressures have been on the decline but European Central Bank (ECB) policymakers have been stressing the need to stick to aggressive tightening, with the exception of board member Fabio Panetta who on Thursday called for smaller rate hikes.

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Big earnings boost

European banks rose 2.1 per cent to lead gains among Stoxx 600 sectors while industrials were also a big boost to the index, with upbeat earnings reports driving gains.

Airbus rose 4.9 per cent after the world’s largest planemaker posted a stronger-than-expected quarterly operating profit.

Pernod Ricard gained 3.4 per cent after the French drinks maker delivered forecast-beating first-half profit and sales, while the UK’s Standard Chartered reported a 28 per cent rise in annual pretax profit and unveiled a new US$1 billion share buyback programme, pushing its shares 4.1 per cent higher. London’s FTSE 100 gained 0.2 per cent, closing above 8,000 points for the first time.

Germany’s Commerzbank jumped 11.6 per cent on better-than-expected quarterly net profit, while French telecoms company Orange rose 6.5 per cent as it said it expects to bolster cash flows and increase shareholder returns by 2025.

Bucking the trend and limiting the Stoxx 600’s advance, was Nestle, which fell 2.5 per cent after world’s biggest food group missed 2022 profit forecasts. REUTERS