UK Markets closed

U.S. election bets, earnings drive European stocks to two-week high

Sruthi Shankar
·2-min read
The German share price index DAX graph at the stock exchange in Frankfurt
The German share price index DAX graph at the stock exchange in Frankfurt

By Sruthi Shankar

(Reuters) - European stocks hit a more than two-week high on Thursday, as strong quarterly earnings, fresh stimulus for Britain's coronavirus-hit economy and a post-election gains for Wall Street lifted investor spirits.

The pan-European STOXX 600 index <.STOXX> gained 1.1% to touch its highest level since Oct. 19 and was on track for its best weekly showing in more than six months.

Technology stocks <.SXTP> jumped 2.5% as did their U.S. peers, but gains were broad-based in Europe with media <.SXMP>, automakers <.SXAP> and chemical companies <.SX4P> surging over 2%.

While the outcome of the U.S. presidential election is still unclear, Democratic challenger Joe Biden was edging closer to victory over Republican President Donald Trump, who has alleged voting fraud, filed lawsuits and called for at least one state recount.

Investors were counting on Republicans to maintain control of the U.S. Senate, which dims prospects for a large new stimulus package but makes it harder to enact tighter regulation or raise corporate taxes on American firms.

"From a market perspective, the uncertainty we are seeing does little to hurt sentiment, with the prospect of a split Congress limiting the possibility of higher taxes under Biden," Joshua Mahony, senior market analyst at IG said in a note.

A handful of upbeat corporate results also lifted European markets, with Munich-based broadcaster ProSiebenSat.1 Media <PSMGn.DE> jumping 8.9% after it returned to profit in the third quarter and reinstated its outlook for the full year.

French lender Societe Generale <SOGN.PA> gained 3.7% after a recovery in its equity trading business helped it swing back to a quarterly profit.

British insurer RSA <RSA.L> soared 45.7% as it said England's second national lockdown is unlikely to have much impact on its business.

Wind turbine maker Siemens Gamesa <SGREN.MC>, which would benefit from Biden's clean energy push, rose 5.1% after it confirmed forecasts for a steady rise in margins until 2023.

Its shares, along with those of rival Vestas <VWS.CO>, took a hit on Wednesday amid uncertainty over the U.S. election outcome.

Markets also took heart from new economic stimulus to cushion the impact of the coronavirus crisis, with the UK's FTSE <.FTSE> up 0.4% after the Bank of England increased its already huge bond-buying stimulus and Finance Minister Rishi Sunak extended his costly coronavirus furlough scheme

Banks <.SX7P> came under pressure, with Dutch bank ING Groep NV <INGA.AS> falling 4.8% after reporting lower-than-expected pre-tax profit.

Germany's Commerzbank <CBKG.DE> dropped 5.8% after it reported a quarterly loss.

(Reporting by Sruthi Shankar in Bengaluru; editing by Uttaresh.V, Anil D'Silva and Sonya Hepinstall)