Europe: Shares end week at record highs on earnings boost

European shares closed at a record peak for a second day on Friday (Feb 23) after gains in Standard Chartered following a strong earnings report, while comments from European Central Bank President Christine Lagarde kept investors’ mood in check.

The pan-European Stoxx 600 was up 0.4 per cent to record its fifth straight week of gains, with French and German shares also closing at record highs.

The benchmark index has advanced over 1 per cent in the week and a majority of those gains were contributed by a jump in technology stocks on a blowout forecast from U.S. chipmaker Nvidia.

Chemical and automobile stocks were the biggest gainers for the day, rising 1 per cent each.

Banks moved up 0.8 per cent, steered by a 4.9 per cent jump in Standard Chartered as the UK lender announced a US$1 billion share buyback and rewarded shareholders with dividends after an 18 per cent rise in 2023 profit.

“One of the things that has helped with the economy holding up better than people have expected is that aside from the relevant points around the commercial real estate, credit quality hasn’t deteriorated as much as people had feared,” said Richard Flax, chief investment officer of Moneyfarm.

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Hurting sentiment, ECB president Lagarde said on Friday that relatively benign fourth quarter wage growth data are encouraging but not yet enough to give the central bank confidence that inflation has been defeated.

Bundesbank President Joachim Nagel said the ECB should resist the temptation to cut interest rates early, especially before crucial wage data in the second quarter.

Shares of Georg Fischer topped the charts with an 8.3 per cent surge after the Swiss industrial group withdrew its plan for a capital increase to finance the takeover offer for Finland’s Uponor.

Volvo Cars slid 4.9 per cent to the bottom of Stoxx 600 as it plans to distribute 62.7 per cent of its stake worth 9.5 billion crowns (S$1.2 billion) in Swedish electric vehicle manufacturer Polestar Automotive Holding to its own shareholders.

Mercedes Benz added 0.6 per cent after brokerage Barclays upgraded the luxury car maker to “overweight” from “equal weight”.

Bouygues dropped 1.6 per cent after unit Bouygues Telecom said it had signed an exclusivity agreement with La Poste Group to buy La Poste Telecom for 950 million euros (S$1.4 billion).

BASF forecast a rebound to core profit in 2024 and said it would slash another 1 billion euros in annual costs, citing weak demand and high energy costs in Germany. The chemicals giant’s shares, however, were down 0.5 per cent.

On the data front, the German economy shrank by 0.3 per cent in the fourth quarter, marking a full-year contraction for the eurozone’s largest economy. REUTERS