Europe: Stocks post longest weekly winning streak in 17 months

[MADRID] European equities edged up to a fresh record, as investors weighed prospects for recovery and awaited the earnings season.

The Stoxx Europe 600 Index was up 0.1 per cent at the close, completing a sixth week of gains, its longest weekly winning streak since November 2019. Healthcare and construction shares led gains, while energy dropped. The tech subindex rose 0.3 per cent, almost ending at 700 for the first time since the dot-com days of 2001.

European equities have rallied strongly in 2021, in a rare instance of outperforming the US, as investors have boosted the cheap and cyclical shares that dominate the region's stock market on bets of a vaccine-fueled recovery.

The Stoxx 600 this week surged above its previous record held in February 2020, erasing all its pandemic-fueled losses.

The next catalyst for stocks is likely the upcoming earnings season that should confirm positive macro trends, said Ignacio Cantos, investment director at ATL Capital in Madrid.

"Until then, we will see a lateral market, there's still lots of money available and few places to put it but the big question is if the recovery is already priced in," Mr Cantos said.

"Equities had a strong run in 1Q, with surging inflows and risk-on rotation propelled by vaccine roll-out, fiscal stimulus and dovish policy," Barclays Plc strategist Emmanuel Cau wrote in a note.

"'Goldilocks' economy might be here to stay, but given rather stretched positioning, sentiment, valuations and technicals now, more 'normal' returns are to be expected."

Among notable movers, TUI AG fell 2.1 per cent after issuing convertible bonds. Puma SE climbed 2.3 per cent, boosting consumer shares, after Jefferies predicted a strong earnings update.

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