Sunday 22 September 2019

Problem Solver: European shares start November on a high

Markets continued to brush off concerns over Catalonia’s independence bid, pushing Spain’s IBEX up 0.5pc. Photo: Irochka - Fotolia
Markets continued to brush off concerns over Catalonia’s independence bid, pushing Spain’s IBEX up 0.5pc. Photo: Irochka - Fotolia

Feargal Quinn

European stocks surged to two-year peaks yesterday, lifted by resilient company earnings and record highs set in Asia and New York, though a 6pc slump in Standard Chartered shares kept the banking sector under a cloud.

By 10am, the pan-European STOXX 600 rose 0.6pc to 397.43 points, a level last seen in August 2015.

Some of that was down to Germany's DAX index which, playing catch-up after Tuesday's holiday, jumped 1.3pc to hit a fresh record high.

Markets continued to brush off concerns over Catalonia's independence bid, pushing Spain's IBEX up 0.5pc.

The European benchmark is enjoying its fifth straight day of gains and rose almost 2pc in October, having also taken a cue from global markets which have been propelled higher by hopes of US tax cuts, economic recovery and a robust tech cycle.

"Economically everything looks good at the moment," said Jonathan Bell, chief investment officer at Stanhope Capital.

Bell cautioned, however, that while investors were riding the rising wave, markets could be vulnerable to monetary policy changes.

The day's top performer was British drugmaker Indivior which soared 11.5pc after US authorities recommended approval for an opioid addiction drug. The stock has risen about 24pc already this week.

"On our view (the recommendation) substantially increases the probability of approval ... which is material given its importance to future growth prospects," analysts at Jefferies told clients, rating the stock a Buy.

A fellow drugmaker, Denmark's Novo Nordisk, lost 2.8pc after publishing third-quarter results and warning that new legislation in some US states could hurt business in its key market.

Still on the earnings front, forecast-beating third quarter results drove up shares in Finnish tyre maker Nokian Tyres by some 6pc, while bookmaker Paddy Power jumped 4pc to three-month highs.

The latest earnings season has rekindled some worries for Europe's banking sector.

While BNP Paribas shares extended the previous day's 2.7pc fall due to disappointment in its fixed income trading operations, Standard Chartered was yesterday's biggest loser early in the day, with its biggest daily fall in three months.

The Asia-focused lender posted a 78pc rise in pre-tax profit, but this was overshadowed by higher expenses and flat revenues. Shares in Austria's Raiffeisen bank also fell 2.1pc.



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