LONDON (Bloomberg): European equities surged to a new record high, fueled by positive earnings reports and investor optimism that global growth is strong enough to weather the impact of the coronavirus.
The Stoxx Europe 600 Index added 0.5%, with cyclical sectors such as oil, mining and banking shares leading the advance.
Earnings drove some of the biggest contributors to gains, with Total SA up 2.9% after fourth-quarter figures beat the highest estimates. Sanofi gained 2% as a key medicine is expected to help boost profit in 2020. UniCredit SpA was up 4.8% as the lender mulled higher investor rewards via buybacks and dividends.
While European equities tumbled last week amid fears about the spreading coronavirus, traders have since embraced risk amid a string of reports on possible vaccines for the virus, even as the World Health Organization later said there are no proven therapeutics.
Investors analyzing corporate outlooks to gauge the strength of the global economy have been pleasantly surprised today.
"At the moment the good news is piling up and we have increased our risk exposure over the last two days,”said Ulrich Urbahn head of multi-asset strategy and research at Joh Berenberg Gossler & Co.
"Equities have become even more attractive relative to bonds and economic data remain robust for the time being -- though the coranavirus will have some negative temporary impact on growth figures.”
Another big corporate mover was ArcelorMittal with a jump of 9.8% after the company said it’s more optimistic on the outlook for steel demand this year and expects the effect of the coronavirus outbreak in China will only be felt in the short term.
"The market prefers to put off the virus issue, probably because it’s all a bit uncertain,” said Alberto Tocchio, chief investment officer at Colombo Wealth SA in Lugano. "2020 is going to be very interesting and with much more volatility than previous years, but for the moment let’s enjoy the rally.”
Tocchio says he has been buying stocks since last Friday and had closed his put options on equities early this week as he felt that the stock market sell-off has been "excessive.”
We're sorry, this article is unavailable at the moment. If you wish to read this article, kindly contact our Customer Service team at 1-300-88-7827. Thank you for your patience - we're bringing you a new and improved experience soon!
What do you think of this article?