Europe’s benchmark index reached a new record high on Friday, fueled by rate-sensitive stocks that captured the attention of investors. Despite data indicating that core prices remained high, market participants continued to celebrate positive corporate earnings that contributed to the index’s surge. The pan-European STOXX 600 closed 0.6% higher, marking its sixth consecutive weekly gain. Germany’s DAX also climbed 0.3%, achieving a fresh record high and emerging as a top performer among its regional counterparts in 2024.
Rate-sensitive sectors such as real estate and technology experienced notable gains, with both sectors seeing an increase of over 1%. Additionally, energy stocks also saw an uptick as oil prices advanced by 2% ahead of an OPEC+ decision on supply agreements. These sectoral movements contributed to the overall positive momentum of the European benchmark index.
On the earnings front, Daimler Truck announced an increase in its dividend following better-than-expected pre-tax earnings for 2023. This announcement propelled the company’s shares up by 18.1% as it predicted earnings for 2024 that exceeded analyst forecasts. Despite initial optimism driven by corporate earnings, the STOXX 600 faced a slight setback after data revealed a dip in euro zone inflation. However, underlying price growth remained stubborn, indicating potential economic concerns.
Following the inflation data, some analysts revised their forecasts, with Pantheon Macroeconomics pushing back its ECB rate-cut prediction from April to June. This adjustment was mirrored by Goldman Sachs, further highlighting the impact of economic indicators on market sentiment. Among notable movers, Grifols surged by 18.4% after setting a new 2024 cash flow target, while British broadcaster ITV climbed 14.3% post-selling its stake in BritBox International. Conversely, Kuehne+Nagel experienced a 13.5% decline, citing a drop in annual operating profit and potential impacts from the Red Sea crisis.
On the downside, Saint Gobain saw a 3.7% decrease in its stock value due to challenging market conditions affecting its annual sales in 2023. Volkswagen also faced a 4.9% drop after forecasting a slowdown in sales growth for 2024. Similarly, Ocado’s stock price decreased by 6.9% as brokerages adjusted their target price following Thursday’s results. These challenges underscore the volatile nature of the market and the importance of monitoring both internal and external factors impacting company performance.
The European benchmark index’s record high demonstrates the market’s resilience and the impact of corporate earnings on investor confidence. Despite lingering economic concerns, rate-sensitive sectors and positive earnings reports continue to drive market optimism, highlighting the dynamic nature of the financial landscape.