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Europe: upbeat data from overseas boost equities

Zareena Sayeedova, Leading Analyst, Global Markets Department at Finam Investment Company

On Friday, May 17, European equities hit the highest levels in over five years as US macro data beat analyst expectations.

To remind, the leading indicators index jumped 0.6% in April compared to March, following a 0.2% decline a month earlier. Meanwhile, the preliminary reading of the University of Michigan Consumer Confidence Index climbed to 83.7, from 76.4 in April. The euphoria felt across the US market has repeatedly spilled over to European bourses, holding back a traditional May sell-off.

Virtually all Western European stock markets finished with green on the screen with the exception for Norway, which was closed for Constitution Day. As for the benchmarks, Britain’s FTSE 100 firmed 0.5%, France’s CAC 40 advanced 0.6%, while Germany’s DAX added 0.3%. The regional gaugge STXE 600 ticked up 0.2% to 308.72, a level not seen since June 2008.

The European rally was led by the machine-engineering and financial sectors. The automotive sector in particular was driven by news about the first upswing in regional sales in 19 months.

In Paris, shares in automakers Peugeot Citroen and Renault spiked 10% and 3.6%, respectively, with regional car sales surging 1.8% in April.

Container shipper A.P. Moeller-Maersk gained 1.5% in Swedish trading as the company released its quarterly earnings, with net profit of Maersk Line totaling USD 204 mn, overshooting the consensus by nearly 30%.

Cement-equipment supplier FLSmidth tumbled 9.7% after posting weaker-than-expected first quarter results. The company’s net profit turned out to be several times below the median projection.

Food internet retailer Ocado Group sky-rocketed 36% in London trading on news the supermarket Wm Morrison will pay it GBP 170 mn for a 25-year partnership.

In other news, Lloyds Banking Group shot up 3.2%, topping the 61 pence mark, below which the UK government sustained losses from purchasing a 39% stake in the lender when the lender was bailed out in 2008.

Multinational inspection, product testing and certification companyIntertek Group shed 1.9% after the company reported a lower quarter-on-quarter operating margin.

On Monday, May 20, key regional indexes pointed to a modest rise. By 6:20 GMT futures on Britain’s FTSE 100 for June delivery were 0.31% higher, Germany’s June DAX futures were up 0.68%, while France’s CAC 40 June futures were 0.39% higher.

Index

Country

Value

Change

 Change, %

YTD, %

 ATX

Austria

2,499.83

15.06

0.61%

4.11%

BEL20 Index

Belgium

2,732.29

4.78

0.18%

10.36%

FTSE 100

United Kingdom

6,723.06

35.26

0.53%

13.99%

DAX Index

Germany

8,398.00

28.13

0.34%

10.32%

IBEX 35 INDEX

Spain

8,582.40

40.10

0.47%

5.08%

S&P/MIB

Italy

17,604.61

60.60

0.35%

8.18%

 AEX

Netherlands

368.08

2.71

0.74%

7.40%

OMX Nordic 40

Scandinavia

1185.05

2.63

0.22%

11.71%

CAC 40

France

4,001.27

22.20

0.56%

9.89%

SMI

Switzerland

8,280.25

24.10

0.29%

21.37%