European stocks eyed fresh record highs on Friday as sentiment was lifted by upbeat U.K. retail sales data and strong results from a raft of top companies.
The STOXX Europe 600 index
XX:SXXP,
which encapsulates many of the biggest companies on the continent, at one point rose to just above €491, a few points shy of the barometer’s record close of €494.35 touched on Jan. 5 2022.
Stocks in the U.K. provided propulsion, with the FTSE 100
UK:UKX
index gaining 1.3% after new data published on Friday from the Office for National Statistics (ONS) showed a surprise 3.4% bounce in retail sales in January, in what marked the biggest increase since April 2021.
The positive sales figures signaled the U.K. could quickly recover from the recession, which data published on Thursday showed it had slipped into in the second half of 2023, following the Bank of England’s campaign of interest rate rises.
The January data showed sales increased across all subsectors apart from clothing, with food sales driving the surge. The U.K. previously saw retail sales slump 3.3% in December, in the sharpest fall since January 2021, when shops were closed to prevent the spread of COVID-19.
The FTSE 100 was also boosted by a 5% bounce in shares of NatWest
NWG,
after the British bank posted its highest profits since 2007 on the back of higher interest rates. Other London-listed banks were also firmer, with Lloyds
LLOY,
adding about 4%.
The retail bank also said interim CEO Paul Thwaite will take up the position on a permanent basis after he took over from his predecessor Alison Rose following her resignation in the wake of the scandal surrounding Brexit campaigner Nigel Farage.
Shares in FTSE 100 mining companies including Glencore
GLEN,
Rio Tinto
RIO,
and BHP Group
BHP,
were also stronger on Friday following an uptick in metals prices such as copper
HG00,
In mainland Europe, well-received results from an array of the continent’s corporates also lifted the index, even as Bloomberg data showed more than a third of companies on the MSCI Europe Index fell short of expectations in the fourth quarter in the biggest miss in four years.
Shares in Finnish mining equipment maker Metso
METSO,
led the way with an 8% surge as the company outstripped expectations and put out a positive outlook for its aggregates segment.
Swiss chemicals company Sika
SIKA,
also saw its share price jump 4% as the company met expectations and forecast a 6-9% uptick in its revenue throughout 2024.
Analysts at Bank of America, led by Sebastian Raedler, said stronger-than-expected growth and lower-than-expected inflation had created a “sweet spot” which was driving up the value of European stocks.
The analysts, however, warned of the potential for an asset bubble, as they said a weakening of the macro environment, caused by a one-and-a-half-year delay in the impacts of interest rate hikes, could undermine the fundamentals driving valuations upwards, and lead to a 15% downside for the STOXX Europe 600 index.
This story originally appeared on Marketwatch
