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European stocks rise on solid retail earnings, commodity jump

Stock MarketsOct 09, 2020 04:40AM ET
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© Reuters. FILE PHOTO: The German share price index DAX graph at the stock exchange in Frankfurt

By Sruthi Shankar

(Reuters) - European stock markets gained on Friday on rosy earnings forecasts from retailers Pandora (OTC:PANDY) and Zalando as well as drugmaker Novo Nordisk (NYSE:NVO), with investors keeping an eye out for signs of fresh U.S. stimulus.

The STOXX 600 index (STOXX) rose 0.4%, led by miners (SXPP) and oil companies (SXEP) as commodity prices rose. [MET/L] [O/R]

The European equities benchmark was on course to record its second straight week of gains as a string of mergers and acquisitions as well as a recovery in beaten-down sectors like banks and energy lifted regional markets.

Gains, however, were capped by concerns around rising coronavirus cases across the continent.

"Overall, there is a risk that market sentiment could easily turn sour in the short-term given the uncertainty related to the U.S. election and Brexit as well as rising COVID-19 cases and fears of broader lockdowns," analysts at Unicredit (MI:CRDI) wrote in a note.

The Spanish government said Madrid, one of Europe's worst virus hotspot, must enforce travel restrictions or it will impose a state of emergency.

France's new daily COVID-19 infections remained above the record 18,000 threshold for the second day, while UK's health minister Matt Hancock warned the country was at a "perilous moment" as more than 17,540 new COVID-19 cases were recorded.

Globally, investors are now closely tracking the political events in the United States - a presidential election that is less than a month away and signs of progress on new fiscal stimulus.

President Donald Trump on Thursday raised hopes that Congress could reach a deal, particularly for battered sectors such as airlines.

Sentiment was supported by upbeat earnings outlook. Danish jewellery maker Pandora (CO:PNDORA) jumped 14% and German online fashion company Zalando (DE:ZALG) rose 4.4% after raising their outlook for 2020 on the back of a strong third quarter.

Danish pharma company Novo Nordisk (CO:NOVOb) gained 3.3% after it raised its 2020 sales and operating outlook.

Cruise operator Carnival (L:CCL) (N:CCL) gained 3.7% after it reported a smaller-than-expected quarterly loss and said advanced bookings for next year were improving.

Broadly, companies on the STOXX 600 are expected to post a profit decline of 38% in third quarter and 22.7% in the current quarter, according to Refinitiv data, as businesses recoup from a coronavirus-driven hit.

Euronext (PA:ENX) slipped 2% after hitting a record high last week. London Stock Exchange (L:LSE) accepted a 4.325 billion euro ($5.09 billion) cash offer from the pan-European bourse operator for the Milan stock exchange.

European stocks rise on solid retail earnings, commodity jump

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