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High times as earnings boost European stocks

Thursday, May 04, 2017 - 01:51

Euro zone businesses have raced into the second quarter, turning out their best performance in six years, according to new data. As David Pollard reports, European giants Shell and HSBC reflected the trend with better than expected first quarter results.

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European traders can look twice but, yes, pretty much everything is going their way for a change. Shell says net profit more than doubled in Q1 - joining other energy heavyweights like BP, Exxon and Chevron in beating forecasts. HSBC's profits slipped - but they too beat expectations - and confirm an apparent rebound for Europe's biggest banks. SOUNDBITE (English) JAMES HUGHES, CHIEF MARKET ANALYST, GKFX, SAYING: "The strength in the markets continues, and again, equity desks, treasury desks can continue to perform well as they have done in the recent rally since November." Even the biggest worry dogging the markets is dissipating. Contentious elections in the Netherlands and Austria didn't produce the political shock many feared. That - plus the prospect of a market-friendly candidate winning the French presidency - means an all-round sigh of relief. SOUNDBITE (English) NEIL WILSON, SENIOR MARKET ANALYST, ETX CAPITAL, SAYING: "Investors see nailed-on certainty that Macron's going to win and they can look beyond the French election risk that we've had hanging over the markets for so long. We can start to look past that and move on." It is in fact the best start to European corporate earnings in seven years. Three quarters of companies reporting so far have beaten forecasts. And the economic data confirms a surge in the economy - the latest euro zone PMI reading also at its best in six years. Though therein lies one possible mood-spoiler - if and when the ECB pedals back on its massive stimulus programme. (SOUNDBITE) (English) THINK MARKETS, CHIEF MARKET ANALYST, NAEEM ASLAM, SAYING: "Remember when the Fed started they're winding up their hands of the quantitative easing we had a tantrum in the market. So we are going to have that tantrum in the market. " That could be the future. Just now, the DAX is at all-time high - but share valuations still look cheap to many. Expect, possibly, a rush into European stocks. And - though some may disguise it - more joy among traders.

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High times as earnings boost European stocks

Thursday, May 04, 2017 - 01:51