Mar 13 2024:European shares surged to fresh record highs on Wednesday, driven by gains in retail and utility stocks following positive corporate updates, while investors awaited industrial production data from the region.
The pan-European STOXX 600 rose by 0.1% as of 9:13 GMT, following a record-high close on Tuesday.
The retail (SXRP) index led the sectoral performance, surging by 2.5%, propelled by a 13.6% increase in Zalando shares. The online fashion retailer reported better-than-expected fourth-quarter profits and announced a share buy-back program, anticipating a return to growth and improved profitability in 2024.
Shares of Zara-owner Inditex (BME:ITX) also soared by 4.5% after reporting higher sales at constant currencies in the first half of its spring season, driven by upmarket fashions and sustained strong momentum.
E.ON shares witnessed a 5.0% surge as Europe’s largest operator of energy networks raised its five-year investment target to 42 billion euros ($46 billion) and provided 2024 profit guidance that exceeded expectations. This positive outlook boosted the broader utilities index by 1.1%.
The wave of positive corporate updates has instilled a risk-on sentiment among European investors, reflecting confidence in the economy and encouraging investment in riskier assets despite lingering concerns about inflation.
In other corporate news, Vallourec shares climbed by 6.4% after steelmaker ArcelorMittal (NYSE:MT) announced the acquisition of a 28.4% stake in the France-based company for approximately 955 million euros ($1.04 billion) to bolster its presence in the tubular business.
Conversely, Adidas (OTC:ADDYY) shares fell by 1.9% after the German sportswear giant reported its first loss in over 30 years in 2023 and projected a decline in North America sales this year due to the termination of its partnership with rapper Kanye West in 2022, resulting in the suspension of sales of the highly profitable Yeezy sneaker line.
Victoria Scholar, head of investment at interactive investor, commented, “While footwear sales are booming due to strong demand for Sambas and Gazelles, Adidas apparel has fallen out of favor, and the surge in popularity of athleisure clothing with brands like Lululemon (NASDAQ:LULU) and Alo has impacted Adidas’ clothing lines.”
On the data front, investors awaited the release of euro zone industrial production data for January, expected at 1000 GMT, to gain further insights into the region’s economic resilience and the potential initiation of an interest rate cut cycle.