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Europe's record streak keeps rolling as investors cheer earnings

U.S. Treasury yields extend rising run on Fed taper talk
U.S. Treasury yields extend rising run on Fed taper talk   -   Copyright  Thomson Reuters 2021
By Reuters

By Sruthi Shankar and Shreyashi Sanyal

– European stocks hit record highs on Tuesday, extending gains for a seventh straight session as investors took comfort from strong earnings reports and economic recovery prospects despite concerns about the Delta variant of COVID-19.

The pan-European STOXX 600 index gained 0.4% to notch an all-time high of 472.95 points.

The travel and leisure sector was the top gainer as the world’s largest online betting group Flutter Entertainment jumped 8.6% after it forecast its U.S. business would turn a profit by 2023.

Berlin-based meal-kit firm HelloFresh climbed 9.2% after it reported strong second-quarter growth, as a rise in customers and persistently high order rates bumped up sales.

The benchmark STOXX 600 has inched up to fresh peaks this month as stronger-than-expected earnings, particularly from economically sensitive sectors, such as energy and financials, made investors optimistic that European equities, which have long underperformed its U.S. peers, have more room to run.

“It’s been another day of record highs for the STOXX600… as cautious optimism continues to outweigh concern about rising Delta variant rates in Asia, and to a lesser extent the U.S.,” said Michael Hewson, chief market analyst at CMC Markets UK.

Goldman Sachs raised its 12-month target for STOXX 600 to 520 points from 480, saying it sees “good catch-up trade and value” in banks, energy and basic resources stocks.

The U.S. bank also lifted its target for London’s FTSE 100 to 7,900 points from 7,600. [.L]

Still, investors were concerned about a stuttering economic recovery in Asia and United States due to a rapid rise in coronavirus cases and early withdrawal of an asset purchase programme by the U.S. Federal Reserve.

“The next few days could see increased volatility thanks to the numerous speeches from Federal Reserve officials and the widely anticipated U.S. inflation report,” said Lukman Otunuga, senior research analyst at FXTM.

Among the decliners, Dutch food ingredients group Corbion fell 1.4% after it cut its full-year adjusted EBITDA margin outlook.

Air France KLM and French hotels company Accor slipped after the United States issued a travel warning because of high levels of the COVID-19 virus in France.

Swiss duty free retailer Dufry slipped 3.0% despite boosting its 2021 savings and free cash flow outlook.

(Graphic: STOXX 600 hovers near record high as summer lull sets in,