Europe: Shares post best day in nearly 6 weeks as upbeat Nike results lift retailers

EUROPEAN shares rose on Wednesday (Dec 21), as banks extended gains and upbeat results from Nike boosted the region’s battered retail sector while improving the economic outlook for the eurozone also lifted sentiment.

The region-wide Stoxx 600 index closed 1.7 per cent higher, with consumer discretionary firms such as Adidas and Puma leading gains after US peer Nike beat quarterly revenue and profit expectations.

Shares of Adidas and Puma rose 6.8 per cent and 9.5 per cent, respectively, while London-listed JD Sports jumped 6.1 per cent, lifting the retail index.

Rising borrowing costs and the soaring cost of living have bludgeoned the European retail sector this year, with the industry index on track for its worst annual performance since 2008.

“It looks like there is a last-ditch effort to achieve a Santa rally,” said Victoria Scholar, head of investment at Interactive Investor. “Lighter-than-normal volumes around the holidays could also be exacerbating the moves.”

Germany’s DAX index rose 1.5 per cent.

A GfK institute survey showed consumer sentiment in Germany, Europe’s largest economy, is set to extend its recovery as government relief measures meant to take the bite out of soaring energy prices seem to be having an effect.

This follows figures on Tuesday showing an uptick in eurozone consumer confidence in December.

“The market was pricing a very bad recession with potentially rolling blackouts and stop of industrial plans due to insufficient supply of energy and now the market is pricing out a bit of that,” said Davide Oneglia, chief Europe economist at TS Lombard.

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“The winter is just really beginning so we don’t know what is going to happen, but at the moment certainly markets are feeling more positive about the outlook and so that’s good for stocks.”

The euro Stoxx 50 volatility index hit its lowest level since January, reflecting easing anxiety among investors.

The Stoxx 600 has shed 2 per cent so far in December after two straight months of gains that were underpinned by hopes that cooling inflation would allow the Federal Reserve and other central banks to go slow on interest rate hikes.

Banks advanced 1.6 per cent but were still on track for an annual loss, as fears of recession outweighed gains from rising interest rates.

Philips gained 5.7 per cent after the Dutch health technology company said independent tests on its respiratory devices involved in a major global recall had shown positive results.

British retailers also reported a surprise pick-up in demand in December, a Confederation of British Industry survey showed. REUTERS