European shares on Friday rose to five-month highs, starting this month on a strong footing, as a fresh batch of corporate updates fueled risk appetite, even after US President Donald Trump raised some concerns over trade talks with China.
The pan-regional STOXX 600 on Friday closed up 1.22 points, or 0.4 percent, at 374.24 after hitting its highest since Oct. 8 last year earlier in the session. That was a 0.8 percent gain from a close of 371.23 on Feb. 22.
“Momentum has flagged slightly in recent sessions and concrete news of an agreement between the U. and China is now needed to prolong the rally in risk assets,” Peel Hunt LLP analyst Ian Williams wrote.
In the meantime, it was up to corporate earnings to maintain morale, he added.
Gains spread across all regional bourses, with Germany’s exporter-heavy DAX leading the charge, thanks notably to rising automaker stocks.
The DAX on Friday rose 86.04 points, or 0.8 percent, to 11,601.68, jumping 1.3 percent from 11,457.7 a week earlier.
“If corporate profits do grow, which I think they will, equities look reasonably good value,” RWC Partners Ltd European equity portfolio manager Edward Rumble said.
The Dublin bourse was up 1.3 percent, outperforming its European peers as worries that Britain would crash out of the EU without a deal at the end of this month eased. The market is often seen as a barometer for Brexit sentiment.
The optimism on markets came despite mixed news from economic indicators.
Data showed that eurozone manufacturing activity went into reverse for the first time in more than five years, but German retail sales jumped and the powerhouse’s unemployment remained at record lows.
Still, the market pared some of its earlier gains in the afternoon after data showed that US manufacturing activity last month dropped to its lowest since November 2016.
“Fridays have been good days for markets of late, and investors are hoping that the same trick will be repeated today, with some ‘first day of the month’ inflows helping as well,” IG Group PLC chief market analyst Chris Beauchamp said.
“However, optimism has been dampened by a poor run of US data, with the ISM [Institute for Supply Management] manufacturing PMI [purchasing managers’ index] and personal spending both weaker, plus a downward revision to consumer confidence,” Beauchamp said.
Among individual moves, Italian luxury group Moncler SpA stole the spotlight, rising 11.1 percent for its best day since January 2014 after posting its results for last year, which broker Jefferies Group LLC called “remarkable.”
Moncler peers benefited from the rally, with Gucci owner Kering SA up 3.2 percent, LVMH Moet Hennessy Louis Vuitton SE up 1.5 percent and Burberry Group PLC gaining 3.1 percent.
Britain’s WPP PLC, the world’s biggest advertising company, rose 4.9 percent after its full-year results came as a relief amid fears that the industry is facing structural headwinds.
Investors have been cautious about the company since French rival Publicis Groupe SA’s results earlier this month alarmed the market.
Rheinmetall AG was the second-best performer on the STOXX 600, rising 9.9 percent after its profits surge.
Among financials, Jupiter Fund Management PLC was another big gainer, up 7.1 percent after its dividend beat estimates.
“The company paid out 90 percent of underlying earnings, driving the beat,” Keefe, Bruyette & Woods Inc analysts wrote.
It was a different story for hedge fund manager Man Group PLC, which lost 2.6 percent after reporting funds under management fell last year.
RELX PLC sank 6.9 percent to the bottom of the FTSE 100 for its worst daily performance in almost a decade, after the University of California canceled its contract with the company’s Elsevier publishing arm.
The deal loss would not have a material impact on earnings in the short term, Liberum Capital Ltd analysts said.
However, it will reignite concerns about the concept of “open access,” which the university has said should mean research should be freely available to the public and not behind a paywall.
London’s FTSE 100 on Friday gained 32 points, or 0.5 percent, to 7,106.73, shedding 1 percent from a close of 7,178.60 on Feb. 22.
Additional reporting by staff writer
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