Sika, St Gobain rise on earnings updateShell flags $400 mln hurricane hitLuxury stocks among top boosts
Oct 7 (Reuters) – European stocks rallied on Thursday, as easing oil and gas prices offered relief to investors worried about runaway inflation, while positive earnings updates in the construction and materials sector added to the upbeat sentiment.
Stock market volatility has spiked in the recent weeks on concerns about soaring energy prices spurring inflation and interest rates, debt problems at property developer China Evergrande (3333.HK) and risks from tighter monetary policies.
However, oil prices dropped for a second session after an unexpected rise in U.S. crude stocks, while European gas futures fell back from record highs.
“The moves we’ve seen over the past couple of days have been somewhat extreme – gas prices, oil prices, some of the commodities and the threats of stagflation,” said Stuart Cole, head of macro economics at Equiti Capital.
“You’re at a relative low, and there’s always a chance to bounce up,” Cole said, but added that equity markets are certainly not out of the woods.
There was some reprieve on the U.S. debt ceiling front, after U.S. Senate Republican Leader Mitch McConnell announced plans to extend the borrowing limit into December. read more
Sika (SIKA.S) rose 3.1% after the Swiss construction chemicals maker said it could overcome rising raw material costs and supply chain restrictions to increase its sales and profit margins this year. read more
Similar tone from French construction materials company St Gobain (SGOB.PA) and a stock buyback announcement lifted its shares by 3.2%.
With third-quarter earnings set to kick off later this month, analysts are expecting a slowdown in profit growth as a post-pandemic rebound normalises. Analysts are forecasting a 45.6% jump in profit at STOXX 600 companies, compared with a 152.6% surge in the second-quarter, according to Refinitiv IBES data.
French car parts maker Valeo (VLOF.PA) climbed 4.5% after Citigroup upgraded the stock, citing limited downside risks as much of the auto production expectations have been revised.
Reporting by Sruthi Shankar and Anisha Sircar in Bengaluru; Editing by Subhranshu Sahu and Rashmi Aich
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