Evergrande relief, earnings prop up European stocks
Investors appeared to look past a survey that showed growth in euro zone business activity slowed in October as firms face soaring costs due to supply-chain constraints, while the bloc's dominant service industry struggled amid ongoing COVID-19 concerns. Euro zone inflation expectations hit their highest levels in years, putting additional pressure on the European Central Bank on its insistence on maintaining crisis-era stimulus.
European stocks rose on Friday to trade near six-week highs as a surprise interest payment by debt-ridden China Evergrande Group lifted the mood, while a surge in technology stocks and strong earnings from France's L'Oreal provided further support.
The STOXX 600 added 0.5% and was on course to post its third consecutive week of gains as it tracked its Asian peers, which climbed on news that the Chinese property developer had made a bond payment to avert a default. Among sectors, European personal and household goods as well as tech rose 1.6% and 1.3%, respectively, and were on the list of top gainers.
France's blue-chip CAC 40 rose 1.1% and outperformed its European peers, riding on a 6.5% surge in L'Oreal shares following the cosmetics company's strong results. Shares in Dutch semiconductor equipment maker ASML and German software firm SAP rose around 2% each after stumbling earlier this week following their results.
"We've lots of earnings beats on lowered expectations, and then you're getting comments from CEOs suggesting supply chains are damaged - but certain firms have said that they're on top of it," said Keith Temperton, sales trader at Forte Securities. "That's hopeful for the markets." A bunch of upbeat earnings lifted Wall Street's S&P 500 to a record high on Thursday, while its European counterpart is less than 1% shy of its August peak.
Europe Inc is expected to see a 47.6% rise in third-quarter profit to 96.1 billion euros ($112 billion), latest data from Refinitiv I/B/E/S showed, a slight improvement from last week's 46.7% growth forecast. Investors appeared to look past a survey that showed growth in eurozone business activity slowed in October as firms face soaring costs due to supply-chain constraints, while the bloc's dominant service industry struggled amid ongoing COVID-19 concerns.
Eurozone inflation expectations hit their highest levels in years, putting additional pressure on the European Central Bank on its insistence on maintaining crisis-era stimulus. The central bank is set to meet next week. "The transitory nature of inflation is becoming stickier ... but things are being discounted," Temperton added.
France's Renault slipped 1.8% after the carmaker said its production losses this year would be far larger than previously forecast owing to the global chip shortage. Swedish mining firm Boliden also took a 4.9% dip as its third-quarter operating profit fell below market forecasts, pressured by higher costs and lower volumes.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)