Europe: Shares end higher on China data cheer, travel stocks lead gains
EUROPEAN shares closed higher on Tuesday as travel and leisure stocks led the advance on positive earnings, while better-than-expected economic data from China boosted demand prospects and lifted shares of miners and luxury firms.
The pan-European Stoxx 600 index ended 0.4 per cent higher, holding at more than one-year highs. The travel and leisure sector index was the top gainer, rising 2.1 per cent to its highest level since November 2021.
Ladbrokes-owner Entain Plc jumped 7.2 per cent, to the top of the travel sector index, on posting higher quarterly net gaming revenues.
British airline easyJet Plc added 1.6 per cent as the airline said it expects full-year profit to beat market forecasts.
First quarter earnings for Stoxx 600 companies are expected to decrease 2.5 per cent year-over-year, according to Refinitiv data.
About four Stoxx 600 companies have reported earnings through Tuesday, of which, 75 per cent beat earnings estimates.
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China-exposed European miners rose 1.4 per cent, while luxury stocks, including LVMH, Pernod Ricard and Hermes International added between 0.5 per cent and 1.6 per cent.
Data showed China’s economy grew 4.5 per cent year-on-year in the first quarter, as policymakers moved to bolster growth following the end of strict Covid-19 curbs in December.
“A lot of the good news is reflected in the price already, so going forward, the question will be how sustainable is the China reopening story, which we think it will be at least for this year,” said Janet Mui, head of market analysis at RBC Brewin Dolphin.
Bank stocks, recovered most of the previous day’s declines to end 1.3 per cent higher.
After a rough month, sentiment around lenders has improved amid easing worries about the banking system, signs of cooling inflation and generally hawkish commentary from European Central Bank policymakers.
The banks index is up 5.4 per cent so far in April, after falling 14 per cent in March.
The Stoxx 600 has managed to gain 10 per cent this year, compared with the S&P 500 index’s 7.5 per cent gain.
Goldman Sachs raised its terminal rate forecast for the ECB to 3.75 per cent from 3.5 per cent, but remained on the fence about whether the central bank will raise by 25 basis points (bps) or 50 bps in May.
Danish hearing aid maker Demant jumped 10.2 per cent to the top of the Stoxx 600, after raising its financial guidance for 2023.
Germany’s ZEW survey showed investor sentiment unexpectedly fell in April as financial markets see more restrictive credit conditions in the coming months. REUTERS
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