European markets rallied more than two percent today as investors noted uplifting fundamental indicators amid strong earnings from major players including engineering firm Siemens and Banco Santander. Releases today included a rise in Euro-Zone confidence for the first time in eleven months and a slower increase in the money supply.
[U][B]Europe Session Key Developments[/B][/U][B]
• Strong Earnings Lift Equities
• Basic Materials Rise on Increase in Copper Price
• Fundamental Indicators Raise Optimism
European Stocks Trade Higher on Confidence and Strong Earnings[/B]
European markets rallied more than two percent today as investors noted uplifting fundamental indicators amid strong earnings from major players including engineering firm Siemens and Banco Santander. Releases today included a rise in Euro-Zone confidence for the first time in eleven months and a slower increase in the money supply. Also on the table was an increase in personal consumption in the US while GDP declined sharper than expected. Despite the 6.1% contraction in the world’s largest economy, investors saw strength in consumption and European markets continued to soar higher into the close. German engineering giant Siemens reported profit above analyst estimates at €1.84B euros, well above expectations for net income of €1.65B. Also reporting today was Spanish banking firm Banco Santander which reported profit of €2.096 billion while analysts polled by Bloomberg had expected just €1.85 billion. The company went further in commenting that it expects to earn profit in line with last year’s 8.88 billion euro net income with half of that to be given back to shareholders in dividend payments. Despite the strength, the bank’s bad loans soared 135% and increased to 2.49% of overall lending from 2.04% in December. Ultimately it remains to be seen whether conditions continue to show improvement and whether a sharply divided European Central Bank becomes required to take further action in the months ahead. As of now, traders remain confident that recovery will begin in the latter half of the year and continue through 2010. Germany went as far as to expect growth next year of 0.5% following a contraction of 6% in the current year. Such optimism remains tempered as the IMF and other bodies remain pessimistic on a quick recovery.
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FTSE 100 4,189.59 +93.19 2.27%[/B]
The UK index posted a greater than two gain on the session as basic materials and financials both rose 4.50% on the day. Nine of the ten sectors raced higher while health care fell slightly with a 0.12% decline following sharp upside recently due to the swine flu outbreak. Confidence in Europe has sent all indices higher while strength in financials and rising commodity prices today led the British advances. Leading gains today was RBS with a 12.54% as the firm saw upgrades from HSBC and Morgan Stanley cuts its FY2009 loss estimate on the firm to 8.5 billion pounds. Following not far behind was Barclays with a 10.44% gain following two days of declines as investors bought financial firms following positive comments from other financial firms. Large advances in basic materials came as copper prices surged high with Kazakhmys shares rising 5.91% and Rio Tinto rising 6.47%.
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CAC 40 3,116.94 +65.92 +2.16%[/B]
Trading in the French market led to a considerable gain with nine of the ten indices moving higher and basic materials showing a surprising decline of 1.73%. The move lower came amid other firms in Europe rising as steelmaker ArcelorMittal announced plans to raise $3 billion in a sale of stock and bonds to speed up its debt reduction program. The firm reported a second consecutive quarterly loss today at $1.06 billion, well above analyst estimates for a net loss of $594 million. Sales slid 49% and show trouble for raw material producing companies. On the flip side, Michelin led gains with a 7.42% move as the company commented on the possibility that cash flow may come in positive in the first half as the firm cut operating expenses. Others moving higher included a 6.06% gain in BNP Paribas and a 6.84% move in liquor maker Pernod-Ricard.
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DAX 4,704.56 +97.14 +2.11%[/B]
The German index posted the smallest gain of the five majors but a still respective move in excess of two percent. Seven of the nine sectors rose while basic materials fell 1.17% along with a 2.12% decline in technology stocks. Elsewhere industrials moved sharply higher with a 6.02% gain while consumer services rose 4.72% on the heels of a positive confidence report. Adding to the optimism was a statement by the Economy Ministry with expectations for growth of 0.5% in 2010 following a sharp 6% contraction in GDP for the current year. Engineering giant Siemens led gains with a 8.16% rise as the company reported earnings above analyst estimates. Also seeing significant upside were shares of airliner Lufthansa, gaining 7.14%, as investors bought into the company following a wave of selling in recent days on concern of a swine flu pandemic that would hurt travel significantly.
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IBEX 35 8,891.30 +235.00 +2.71%[/B]
Spain leading index gained the most of the five majors today, propped higher by gains in all sectors with the exception of a small 0.34% drop in telecom. Financials led advancers with a 4.48% move as Banco Santander announced earnings well above estimates and comments for profits in line with the previous year. The stock closed with the largest gain at 6.10%. Also rising significantly was shares of airliner Iberia with a 5.97% move as investor fear over the swine flu eased.
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S&P/MIB 18,904.00 +406.00 +2.19%[/B]
Trading in the Italian market led to a gain of more than two percent as all sectors rose with industrials and consumer services leading the way. Fundamental indicators in the Euro-Zone showed conditions improved in the region for April and investors bought a range of equities. Leading gains was cement maker Buzzi Unicem with a 12.58% gain as BNP Paribas raised the company to “outperform” from “neutral.” Also seeing considerable upside were shares of rival Italcementi which gained 6.56% on the session.
