European equities hit record high after corporate updates
written by Bella PalmerThe retail sector emerged as the top performer, with a 3.4% increase, largely due to an 18.9% surge in Zalando
European equities reached fresh record highs on Wednesday, driven by positive corporate updates from the retail and utilities sectors, although gains were tempered by losses in automakers.
The pan-European STOXX 600 closed 0.2% higher. Earlier in the day, the index hit an all-time high for the fifth time in the last six sessions.
The retail sector emerged as the top performer, with a 3.4% increase, largely due to an 18.9% surge in Zalando.
Optimistic corporate announcements have instilled a risk-on attitude among European investors, indicating a strong belief in the economy.
Expectations of interest rate cuts from both the Federal Reserve and the European Central Bank in June have also contributed to the soaring rally in European stocks.
The start of the easing cycle could be especially beneficial for smaller firms in Europe such as those in the industrials sector as well as small cap firms in the UK, said Helen Jewell, CIO of BlackRock Fundamental Equities, EMEA.
Some of them are trading at very low multiples at the moment and as long as they have got a real robustness to the earnings and relatively low leverage, those are the firms we think could be incredibly interesting going forward, she said.
E.ON shares rose by 6.0% after the company, Europe's largest energy network operator, raised its five-year investment target to 42 billion euros ($46 billion) and provided a 2024 profit forecast that exceeded expectations.
This positive movement pushed the broader utilities index up by 0.8%.
Energy stocks and mining companies provided an additional boost, following the upward trend in commodity prices.
However, Volkswagen's 5.9% decline weighed on Germany's DAX index, as the company forecasted a modest 3% increase in car sales for the year, a significant drop from 2023 due to a bleak economic outlook.
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