European shares start March on a high, driven by healthy corporate numbers

LONDON | Updated on March 01, 2019 Published on March 01, 2019

European shares rose to five-month highs in the morning of the first trading day of March as a fresh batch of corporate updates helped drive a risk-on mood after US President Donald Trump earlier fuelled some concerns over trade talks with China.

The pan-regional STOXX 600 index was up 0.7 per cent by 0926 GMT to above 375 points, a level not see since October 8.

“Momentum has flagged slightly in recent sessions and concrete news of an agreement between the US and China is now needed to prolong the rally in risk assets,” wrote Peel Hunt analyst Ian Williams, noting that in the meantime it was up to corporate earnings to maintain morale.

Gains spread across all regional bourses with Germany's exporter-heavy DAX leading the charge, thanks notably to rising car makers stocks.

“If corporate profits do grow, which I think they will, equities look reasonably good value,” said Edward Rumble, European equity portfolio manager at RWC Partners.

The optimism on markets came despite mixed news from economic indicators.

Data showed euro-zone manufacturing activity went into reverse for the first time in over five years, but German retail sales jumped and the bloc's powerhouse unemployment remained at record lows.

All sectors were on the rise but telecoms were flat. The sector, a traditional defensive play, has suffered from the 5-per cent fall experienced by Belgium's Proximus after it published disappointing results.

Italian luxury group Moncler stole the spotlight with its 2018 results, which broker Jefferies called ”remarkable”, and rose 8.7 per cent.

Moncler peer benefited from the rally with Gucci owner Kering up 3 per cent, LVMH up 2.1 per cent and Burberry rose 1.8 per cent.

In the less fashionable food industry, Spanish sausage casing producer Viscofan was up 7.6 per cent after it struck an upbeat note on 2019 guidance and Kepler Cheuvreux upgraded it to “hold” from “reduce”.

Britain's WPP, the world's biggest advertising company, rose 6.6 per cent after its full-year results came as a relief amid fears the industry is facing structural headwinds.

Investors have been cautious about the company since French rival Publicis earlier this month results alarmed the market.

Among financials, Jupiter Fund Management was another big gainer, up 8.5 per cent after its dividend beat estimates.

“The company paid out 90 per cent of underlying earnings, driving the beat,” write KBW analysts.

It was a different story for hedge fund manager Man Group, which lost 3.6 per cent after reporting funds under management fell last year. Another disappointment came in from Rightmove, which fell 5 per cent.

The property website reported its slowest full-year underlying operating profit growth in nine years, sending its shares down nearly 7 per cent at the bottom of London's blue-chip index.

Published on March 01, 2019
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