European stocks rose on Friday on a surge in technology stocks, strong earnings from France’s L’Oreal SA and a broad boost to sentiment provided by a surprise interest payment from debt-ridden China Evergrande Group (恆大集團).
The STOXX 600 added 0.5 percent to close at over six-week highs and logged its third consecutive week of gains, up 0.5 percent.
News that the Chinese property developer had made a bond payment to avert a default lifted the mood globally. Worries about contagion from a potential default have rattled markets recently.
France’s blue-chip CAC 40 rose 0.7 percent and outperformed its European peers, riding on a 5.1 percent surge in L’Oreal shares following the cosmetics company’s strong results.
Shares in Dutch semiconductor equipment maker ASML Holding NV and German software firm SAP SE rose 3.2 percent and 1.2 percent respectively, after stumbling earlier this week following their results. The tech sector rose 1.5 percent.
Investors appeared to look past a survey that showed growth in eurozone business activity slowed this month as firms face soaring costs due to supply chain constraints, while the bloc’s dominant service industry struggled amid COVID-19 concerns.
Automaker Renault SA and Continental AG flagged chip shortages hitting output and margins.
“We’ve lots of earnings beats on lowered expectations, and then you’re getting comments from CEOs suggesting supply chains are damaged — but certain firms have said that they’re on top of it,” said Keith Temperton, sales trader at Forte Securities. “That’s hopeful for the markets.”
A bunch of upbeat earnings lifted Wall Street’s S&P 500 to a record high, while its European counterpart is less than 1 percent shy of its August peak.
Europe Inc is expected to see a 47.6 percent rise in third-quarter profit to 96.1 billion euros (US$112 billion), latest data from Refinitiv IBES showed, a slight improvement from last week’s 46.7 percent growth forecast.
Eurozone inflation expectations hit their highest levels in years, putting additional pressure on the European Central Bank over its insistence on maintaining crisis-era stimulus. The central bank is set to meet next week.
“That inflation is transitory does not necessarily mean that it is short-lived. An adjustment of supply to the changes in patterns of demand caused by the pandemic may be slow, and keep upward pressure on prices for longer,” strategists at Citigroup Inc wrote in a note.
Swedish mining firm Boliden AB dipped 6.8 percent as its third-quarter operating profit fell below market forecasts.
Remy Cointreau rose 1.8 percent after it said it was growing increasingly confident about its full year outlook after second-quarter sales beat expectations.
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