Solid earnings lift European stocks ahead of ECB meeting outcome

The pan-European STOXX 600 index rose 0.5%, extending gains for a second day, after fears of a new wave of COVID-19 cases pushed European markets to their worst day in 2021 on Tuesday. Euro zone stocks outperformed, up 0.6%, boosted by shares in Dutch seminconductor equipment maker ASML as its strong earnings forecast on Wednesday spurred many brokerages to lift their price targets.


Reuters | Updated: 22-04-2021 14:12 IST | Created: 22-04-2021 14:12 IST
Solid earnings lift European stocks ahead of ECB meeting outcome

European stocks moved towards record highs on Thursday after stumbling earlier in the week, as a set of strong earnings reports brightened sentiment ahead of the European Central Bank's policy decision. The pan-European STOXX 600 index rose 0.5%, extending gains for a second day, after fears of a new wave of COVID-19 cases pushed European markets to their worst day in 2021 on Tuesday.

Euro zone stocks outperformed, up 0.6%, boosted by shares in Dutch seminconductor equipment maker ASML as its strong earnings forecast on Wednesday spurred many brokerages to lift their price targets. Heavyweight Nestle rose 3.7% after reporting its strongest quarterly sales growth in 10 years, helped by demand for coffee, dairy and petcare products.

Luxury stocks also climbed, with Birkin bag maker Hermes up 2.5% as strong growth in Asia powered a 44% surge in quarterly sales. French spirits group Pernod Ricard gained 2.5% as it predicted an organic growth of around 10% in its full-year profit.

While global investors remain nervous about a resurgent coronavirus crisis in Asia and stretched valuations in parts of U.S. equities, European stocks have enjoyed strong gains this year as COVID-19 vaccination drive and stimulus programmes lift hopes of a strong economic rebound. "The U.S. re-opened more and a lot of the European re-opening is still ahead of us. So, you've to put European equities on a bit of a recovery multiple," said Mikhail Zverev, head of global equities at Aviva Investors. "You could almost justify a premium to U.S. because the recovery is yet to come."

European companies are set to exit a two-year profit slump with a record jump that outperforms U.S. peers, with profits for companies on the STOXX 600 forecast to have risen 61% in the first quarter, as per Refinitiv IBES data. All eyes will turn to the ECB policy decision at 1145 GMT, with investors looking for clues on how the central bank will react to an expected economic recovery.

The central bank is expected to keep policy unchanged, but could set the stage for June, when policymakers have to decide whether to slow down bond buying. Software group SAP rose 1.4% after it said its new all-in cloud package was proving to be a hit with customers, and it confirmed its recently raised guidance.

Credit Suisse fell 4.9% after it posted a 757 million Swiss franc ($825.97 million) pre-tax loss in the first quarter, as the Archegos hit wiped out gains from bumper trading.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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