European stocks ended at a record high on Friday, marking its seventh straight week of gains, after strong US and China economic data spurred optimism about a speedy global recovery, while upbeat results from Germany’s Daimler boosted carmakers.
The pan-European STOXX 600 index rose 0.8%. Leading regional peers, Germany’s DAX gained 1.3% to hit an all-time high, while UK’s FTSE 100 was up 0.5%, closing at over one-year highs.
Global stock markets scaled record highs after data showed China’s economic recovery quickened sharply in the first quarter and US retail sales rose by the most in 10 months in March.
“The good news continues to flow of both the corporate and economic fronts, after a very good start to the reporting season by the banks over the past few days. Now the focus becomes broader, taking in a wider range of sectors,” said Chris Beauchamp, chief market analyst at IG.
German car and truck maker Daimler rose 2.7% as higher vehicle prices and strong demand in China helped it post a better-than-expected surge in quarterly operating profit.
The wider automobiles & parts index gained 2.1% to lead gains among European sectors.
Data showed new car registrations jumped 87.3% in March in the European Union.
While the STOXX 600 marked its longest weekly winning streak in nearly three years, up 1%, moves this week have been tight-ranged, with most European bourses holding near pre-pandemic levels. Analysts expect profit for STOXX 600 companies to jump more than 55% in the first quarter after a slide of nearly 40% in the same quarter last year, according to Refinitiv IBES data.
Meanwhile, a Reuters poll of economists showed the euro zone economy will recover at a much weaker rate this quarter than expected only a month earlier, with a slower vaccine rollout among the biggest risks.
Fitch on Friday said it could take at least a decade for Italy’s debt-to-GDP ratio to return to its pre-Covid-19 level.
Bank of Ireland jumped 8.4% to the top of the STOXX 600 after it reached a deal with Belgian financial group KBC to explore the sale of most of KBC’s Irish unit. Lancome maker L’Oreal slipped 1.8% on disappointment at figures from the company’s consumer products division despite overall strong group results.
Next week, eyes will be on the European Central Bank meeting on Thursday.
“The ECB will look through any temporary increases in headline inflation and will not accept any increases in bond yields unless they are the result of improved growth prospects,” ING said in a note.
London’s benchmark FTSE 100 index climbed above 7,000 points for the first time since February 2020, or just before the coronavirus pandemic took hold worldwide.
“The FTSE’s breakout above the key 7,000 level and the DAX surging to a new record high suggest investors remain convinced that the European economy will also rebound strongly in the months ahead as lockdowns ease and travel and tourism resumes,” said Think Markets analyst Fawad Razaqzada.
Shares in miners and oil producers were scooped up Friday on news that China’s economy — the world’s second biggest after the US — expanded at a record pace in the first quarter.
China saw expansion of 18.3% in the first quarter, boosted by a sharper-than-expected increase in retail sales.
The economic growth figure was the highest since records began three decades ago, enhanced by its chronically weak comparison figure from last year, though the reading was slightly below forecasts in an AFP survey.
It followed figures on Thursday showing US jobless claims came in at their lowest level since the pandemic began, while retail sales soared in March.
“Impressive retail sales and jobless claims figures highlight the positive impact (US President) Joe Biden’s $1.9tn coronavirus support package has made upon jobs and consumer spending,” said Joshua Mahony, senior market analyst at IG trading group.
Wall Street’s Dow index ended Thursday above 34,000 points for the first time and the S&P 500 clocked yet another record high.
And on Friday both the Dow and S&P pushed higher, while the Nasdaq Composite dipped.
“The bulls continue to call the shots and they have reason once again to like what they see and hear as it resembles in many respects what they saw and heard yesterday,” said Patrick J O’Hare at Briefing.com.
He pointed to continuing good earnings news, including from bank Morgan Stanley, as well as a surge in new housing starts.
Traders have also been buoyed by falling US Treasury bond yields which soothed worries that strong economic recovery could send inflation rocketing and force the Federal Reserve to raise its record-low borrowing costs.
In London, the FTSE 100 closed up 0.5% to 7,019.53 points; Frankfurt — DAX 30 ended up 1.3% to 15,459.75 points and Paris — CAC 40 closed up 0.9% to 6,287.07 points yesterday.
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