As attention shifted to the first quarter corporate results season, European equities marginally increased. Investors also examined the potential for economic growth as statistics from China suggested the recovery was on track.
In London, the Stoxx 600 Index was up 0.2%. Shares in the banking, travel, and leisure industries performed better than those in the food and personal care industries.
Ericsson AB saw a dip after revealing that 5G spending would decrease in several of the company’s more developed regions. EasyJet Plc, which climbed after stating that reservations will continue to be strong in the months ahead, helped travel-related stock prices by upping its earnings projection for the second time this year.
The Rebound of European Stocks
European equities have recovered to reach their highest level in more than a year, following last month’s banking instability that sent them reeling. Banks and energy are doing well, again outperforming US equities in April. But investors continue to flee to safe havens like healthcare and telecommunications. Investor focus is now shifting to the earnings reporting season, which will reveal how corporations dealt with the economic slowdown, poor consumer demand, and high inflation.
The Pessimism of Investors
The most recent European fund manager survey by Bank of America Corp. revealed that most investors are now pessimistic about the region’s equity market. According to the survey conducted in the week leading up to April 13, the sector of banking shares continued to capitulate, moving from being the most significant consensus overweight in February to an underweight position.
The analysts at Citigroup Inc. reported that European earnings revisions had been primarily negative for half of their sample of 219 European companies. According to their methodology, 7 out of 11 industries should have fewer companies exceeding expectations than is typical. A third of the companies with misses in their most recent release is to meet projections, which is more encouraging.
The first quarter saw China’s economy expand at its quickest rate in a year. It was driven by increased consumer spending and an uptick in factory output. It indicates the recovery is proceeding as planned. European luxury stocks are in the spotlight as a result.
