German, French stocks hit record highs, nudging European markets higher
European shares hovered near record levels on Thursday fuelled by strong earnings, although weakness in commodity-related stocks due to declines in oil and metal prices limited gains.
The pan-European STOXX 600 climbed 0.1%, with auto stocks hitting a record high boosted by German carmaker Daimler's 1.3% gain. Berenberg initiated coverage on Daimler with "buy", saying it expects the recently spun-off Daimler Truck to spark higher returns.
"There's a gradual creeping of money into the European market," said Graham Secker, European equity strategist at Morgan Stanley. While gains for the STOXX 600 have been small recently, the benchmark index has risen 17 times over the last 19 sessions, helped by a stronger-than-expected earnings season and an accommodative monetary policy.
"General investor sentiment has been too cautious, but now as concerns through July, August and September about the U.S. and China slowdown and earnings season are starting to lift, that's allowing equities to move higher," Secker said Germany's DAX, Switzerland's SMI and France's CAC 40 touched all-time highs during the session.
Oil stocks were among the biggest drags on the index, down 1.1% after crude prices plunged on worries of a supply overhang and the prospect of China moving to release strategic fuel reserves. Miners slipped 0.6% after London copper prices fell to their lowest in more than a month.
Latest Refinitiv data shows profits of companies listed on the STOXX 600 are expected to rise 60.4% in the third quarter to 103.6 billion euros ($117.2 billion) from a year earlier, a dip from last week's 60.7% estimate. "The Eurozone has seen larger earnings upgrades than other regions, and we forecast 60% earnings growth this year," analysts at Swiss bank UBS wrote in a note.
Submarines-to-steel group Thyssenkrupp jumped 4.9% after the company said its profit could more than double next year and it may take its hydrogen unit public. Playtech rose 4.1% after receiving a takeover bid from JKO Play Ltd, a firm co-owned by former F1 boss Eddie Jordan. JKO joins a series of takeover bids for the British online gambling software developer.
A decliner was German auto supplier Continental, which fell 4.4% after it announced the departure of its chief financial officer following a probe into the illegal use of defeat devices in diesel engines.
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