European equities advanced the most in a month on Wednesday as investors bet the global economic rebound would persist even as central banks prepare to scale back support.
The Stoxx Europe 600 Index was up 0.9% at 9:50 a.m. in London to be within 0.3% of an historical peak. Retail and travel and leisure were among the best performers, while technology followed Chinese peers higher. Miners underperformed as iron ore futures slid.
After hitting a record high a few weeks ago, European shares have struggled for direction as economic statistics pointed to a more sluggish rebound than forecast and as monetary policymakers on both sides of the Atlantic suggested stimulus may be tapered. Still, August was the Stoxx 600’s seventh positive month in a row — the longest winning streak since 2013.
Investors may have factored-in some of those lingering risks, according to Richard Dunbar, head of multi-asset research at Aberdeen Standard Investments: “Markets had already taken quite a lot of that on board,” he said by phone.
European shares may also be playing catch-up on the second-quarter earnings season, according to Dunbar. “Stock markets haven’t really bounced on the back of those better-than-expected results, so in essence we’ve had somewhat of a derating.”
Amid the threat posed by the delta Covid-19 variant, bets on the economic bounceback were further fueled Wednesday by news that the European Union had fully vaccinated 70% of its adult population. Survey data, meanwhile, showed unfilled orders at Europe’s factories have risen to an unprecedented level.
“Global growth, though likely past the peak, looks set to remain,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note to clients prior to the data release.
The monetary policy outlook, meanwhile, remains accommodative, according to Georgina Taylor, a multi-asset fund manager at Invesco Asset Management Ltd. “Starting to just reduce quantitative easing is not the same as rate hikes,” she said in a Bloomberg Television interview. “That’s something that the market is grappling with slightly at the moment.”
Among individual movers, Pernod Ricard SA gained 3.3% after the distiller reported sales growth that was ahead of consensus, while grocer Carrefour SA fell 4.3% as billionaire Bernard Arnault sold his remaining holding.
WH Smith Plc slid 5.7% after the travel-focused retailer predicted profitability for the year at the lower end of market expectations.
