European Stocks Higher; SocGen, Unicredit 1Q Earnings Impress


By Peter Nurse – European stock markets traded higher Thursday, as investors digest another largely positive batch of corporate earnings, including from Societe Generale (OTC:SCGLY) and Unicredit (MI:CRDI) and fashion retailers.

At 3:40 AM ET (0840 GMT), the DAX in Germany traded 0.6% higher, the CAC 40 in France rose 0.5% and the U.K.’s FTSE 100 climbed 0.3%, rising to a new 52-week high.

It has been another busy day for corporate earnings in Europe, with the banking sector leading the way.

Societe Generale stock rose 5.9% after the French banking giant handily beat expectations in its first quarter, boosted by a strong performance in its global markets division. Unicredit stock also rose 4.4% after the Italian bank also posted a respectable rebound, amassing its biggest ever cushion for payments to shareholders.

Elsewhere, Volkswagen (DE:VOWG_p) stock rose 1% after Europe’s largest carmaker raised its operating margin target for 2021, pointing to stronger demand for more profitable cars during the first three months of the year.

EssilorLuxottica (PA:ESLX) stock rose 1.5% after the maker of Oakley and Ray-Ban glasses said its first-quarter sales were boosted by a strong rebound in China and the United States, while Next (LON:NXT) stock rose 2% after the U.K. fashion retailer raised its full-year profit guidance for the second time in two months. Elsewhere in fashion, German online chain Zalando (DE:ZALG) also raised its outlook for the year. Zalando’s upgrade is particularly notable, given that it had been a relative winner from lockdowns last year.

On the flip side, ArcelorMittal (NYSE:MT) stock fell 1.3%, slipping from a 52-week high, despite the world’s largest steelmaker reporting strong first-quarter earnings, and Air France KLM (OTC:AFLYY) stock dropped 1.5% after the airline group posted a wider first-quarter operating loss and said it was looking at issuing equity-like instruments to strengthen its balance sheet.

The morning’s biggest loser however was BioNTech, which fell 13.5% after the European Commission said it was ready to discuss U.S. plans for a temporary waiver of intellectual property rights on Covid-19 vaccines to accelerate the global vaccination campaign.

The major European indices closed substantially higher Wednesday, with the DAX gaining 2.1%, the FTSE 100 1.7% and the CAC 40 1.4%, having their best day in nearly two months.

Away from the corporate sector, the Bank of England announces its latest monetary policy decision later in the session and is widely expected to hold rates steady at 0.10% and keep its monthly bond purchases steady.

However, the central bank is also likely to significantly upgrade its growth outlook, which would increase expectations that its next move will be to tighten monetary policy rather than provide fresh stimulus to the economy as the pandemic eases.

German factory orders rose 3.0% in March, while the final U.K. composite PMI readings for April and Eurozone retail sales for March are due later in the session.

Oil prices edged higher Thursday following a huge fall in U.S. crude stockpiles, but gains are small as the recovery from the Covid-19 pandemic remains uneven.

Government data from the U.S. Energy Information Administration late Wednesday showed crude stockpiles contracted by nearly 8 million barrels last week, falling to their lowest level since late February.

That said, the EIA also detailed a larger-than-expected 737,000-barrel build in gasoline inventories, rising for the fifth straight week.

U.S. crude futures traded 0.4% higher at $ 65.89 a barrel, while the Brent contract rose 0.5% to $ 69.29.

Elsewhere, gold futures rose 0.5% to $ 1,792.95/oz, while EUR/USD traded 0.2% higher at 1.2025.

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