European stocks higher earnings

dpa-AFX
(TNS) European stocks higher earnings

Frankfurt — European stocks closed broadly higher on Wednesday, and several markets in the region posted record highs, reacting to some upbeat earnings updates and on optimism about interest rate cuts by the Federal Reserve and a few other central banks, including the ECB, this year.

Markets also benefited from US President Donald Trump’s announcement of a big investment in AI infrastructure in the United States.

In an interview with Bloomberg TV’s Francine Lacqua in Davos, Switzerland on Wednesday, ECB policymaker Klaas Knot backed the idea of near-term cuts.

Knot said that investor bets for interest-rate cuts in January and March are reasonable, but any commitment beyond is difficult due to heightened global uncertainty.

Concerns about tariff threats by Trump hurt a bit and limited the upside in some of the markets. The US president has repeated his threat to impose tariffs on imports from European countries. He also said his administration was discussing imposing an additional 10% tariff on goods imported from China, starting in February.

The European Union’s commissioner for the economy, Valdis Dombrovskis said that Europe will respond to any US tariffs in a proportionate way.

The pan European Stoxx 600 gained 0.39%. Germany’s DAX climbed 1.01%, with Adidas’ upbeat results contributing significantly to the rise. France’s CAC 40 gained 0.86%, while the UK’s FTSE 100 edged down 0.04%. Switzerland’s SMI closed stronger by 0.8%.

Among other markets in Europe, Denmark, Finland, Iceland, Norway, Poland, Russia, Sweden and Turkey closed higher.Austria, Belgium, Greece, Ireland, Portugal and Spain ended weak, while Netherlands settled flat.

European stocks higher earnings

In the UK market, Intermediate Capital climbed about 6.5%. The company reported assets under management or AUM of $106.571 billion at constant currency as on the third quarter ended December 31, 2024. That was up 27.5% higher than the previous year. AUM increased 5.1% from the last quarter.

Halma, Entain and Aviva gained 3.4 to 4.3%. Smiths, Diploma, Scottish Mortgage, Intercontinental Hotels, Rolls-Royce Holdings and Spirax-Sarco Engineering gained 1.5 to 2%.3i, Compass Group, Beazley, Next, Haleon, Lloyds Banking, Tesco and Schrodders also closed notably higher.

EasyJet closed down 4.8% despite the airline company reporting narrower pre-tax loss for the first quarter. For the three-month period to December 31, 2024, the company recorded a headline pre-tax loss of £61 million, down from a loss of £126 million, reported for the same period last year.

Vistry Group, United Utilities, Croda International, Auto Trader Group, Coca-Cola, Vodafone, Severn Trent, Centrica and Anglo American Plc lost 1.5 to 2.7%.

In the German market, Adidas climbed 6% after reporting a 24% jump in revenues to €5,965 million in the fourth quarter of 2024, up from €4,812 million last year. The company’s operating profit reached €57 million in the quarter, compared to operating loss of €377 million last year.Siemens Energy gained about 6.7%.

Munich RE rallied 4.1%. Sartorius, Puma, Hannover Rueck, MTU Aero Engines, Rheinmetall and SAP moved up 2 to 3.5%.Siemens, Beiersdorf, HeidelbergCement and Deutsche Boerse also closed with solid gains.Porsche, RWE, Bayer, Deutsche Post, E.ON, Zalando, Deutsche Telekom, Vonovia and BASF lost 1 to 2.3%.

In the French market, Renault rallied more than 3%. Legrand, L’Oreal, Schneider Electric, Safran, Dassault Systemes and Hermes International gained 2 to 3%.LVMH, Accor, Essilor, AXA, Bouygues, Airbus, Air Liquide, Thales and Edenred also closed on a firm note. Carrefour lost about 2.5%. ArcelorMittal, Vivendi, Veolia, Kering, BNP Paribas, Engie, Teleperformance and Credit Agricole closed down 1 to 2.3%.

Data from the UK’s Office for National Statistics said that the nation’s budget deficit more than doubled in December from the last year as increases in spending were much larger than increases in receipts. Public sector net borrowing increased £10.1 billion from the last year to £17.8 billion in December.

This was the highest December borrowing for four years and also above £14.6 billion forecast by the Office for Budget Responsibility.

At the same time, borrowing to fund day-to-day public sector activities rose by £7.3 billion to £10 billion, the highest deficit for December in two years.

Borrowing in the financial year to December was £129.9 billion, which was £8.9 billion more than at the same point in the last financial year, the data said.

Notes from APS Radio News

From the early part of March 2020 to the Summer of 2022, the Federal Reserve implemented a massive program of “quantitative easing.”

Quantitative easing refers to the process whereby a central bank purchases government bonds and corporate bonds.

At times quantitative easing involves a central bank’s purchasing mortgage-backed securities.

During the period from the end of February to the Summer of 2022, the Federal Reserve added about $4.6 trillion.

That policy was being implemented during a period when shortages of various goods and services, or what some were calling supply chain problems.

Shortages developed, in part, because of lock-downs, the closures of up to 200,000 small & medium sized businesses by December 2020 as well as sanctions that were imposed over the Ukraine-Russia war.