European Stocks Rally on Optimism About Economy

Date : 01/24/2020 @ 1:06PM
Source : Dow Jones News
Stock : FTSE 100 Index (UKX)
Quote : 7430.37  21.24 (0.29%) @ 8:43AM

European Stocks Rally on Optimism About Economy

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By Avantika Chilkoti 

European stocks rose Friday as fresh economic data signaling a halt to the slowdown in the German manufacturing sector buoyed investors' sentiment.

The pan-continental Stoxx Europe 600 index gained 1.2%, while futures tied to the Dow Jones Industrial Average edged up 0.3%.

Preliminary data on purchasing managers' indexes, closely watched measures of business activity, suggested that the manufacturing sector in the eurozone -- and Germany, in particular -- fared better than the market had expected in January. Factories in the region saw export orders begin to stabilize after a long and deep decline, and while the manufacturing sector continued to contract, it was at a slower pace than previous months.

"The markets are reacting to the signs of bottoming in German manufacturing," said Mike Bell, global market strategist at J.P. Morgan Asset Management. "It's pretty key because the big question on everyone's mind has been: is there recession risk? And the most obvious risk there was a downturn in European manufacturing."

Ahead of the opening bell in New York, shares in Intel rose over 5%. On Thursday, the giant chip maker reported fourth-quarter earnings that beat expectations following an upswing in personal-computer shipments and robust demand for chips to power data centers.

Rival chip maker Broadcom gained 3.4% in offhours trading after the company said Thursday that it had secured multiyear supply agreements to provide wireless components for Apple products.

Within European equities, Ipsen plunged over 25% after the French biopharmaceutical company paused trials on a drug for ultrarare bone diseases, and said it's evaluating the implications on its 2022 financial outlook. Rémy Cointreau retreated 9% in Paris after the beverages maker reported disappointing sales.

Shares in Ericsson dropped 6.4% after higher costs weighed on the telecommunications equipment company's latest earnings, and it said expenses will continue to rise this year.

Meanwhile, Carrefour rose 5.3% after the French retailer boosted its guidance for 2019 earnings, exceeding investors' expectations.

U.K. stocks also advanced, with the FTSE 100 index climbing 1.7% after the latest purchasing managers index data was better than analysts expected.

The readings are "the surest sign yet that the economy has turned a corner since the election," and would likely mean the Bank of England holds off cutting rates later this month, analysts at Capital Economics said in a note.

Over in Asia, Japan's Nikkei 225 benchmark closed up 0.1% and Hong Kong's Hang Seng finished the day up almost 0.2%. Chinese and Korean markets were closed for public holidays.

Later in the day, IHS Markit is scheduled to publish the latest PMI data for the U.S., which may show very modest slowdowns in the manufacturing and services sectors while remaining in expansion territory.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com

 

(END) Dow Jones Newswires

January 24, 2020 07:51 ET (12:51 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.


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