European Stocks Climb to Five-Year High Amid Syria Delay
European stocks rose to the highest level in more than five years as U.S. President Barack Obama postponed a decision on military action against Syria.
ARM Holdings Plc, which designs chips for Apple Inc.’s iPhones, rallied the most in four months after the U.S. company unveiled two new models of the device. EON SE and RWE AG surged more than 4 percent, leading a gauge of utilities higher. Kingfisher Plc retreated 2.7 percent after first-half pretax profit missed analysts’ estimates.
The Stoxx Europe 600 Index rose 0.4 percent to 310.88 at the close of trading, the highest level since June 2008. The benchmark gauge extended gains in the final minutes of trading, surpassing the 310.59-point closing high it reached in May. The measure has advanced 4.6 percent in September as Chinese manufacturing, industrial production and retail sales increased.
“Equity markets have had a good run so far this month,” Stewart Richardson, who helps oversee about $100 million as chief investment officer at RMG Wealth Management LLP said by phone. “The recent run of upward closes has been helped by good Chinese data and the lessening of the threat in Syria. Markets need a new catalyst, and may drift sideways towards the Federal Reserve meeting next week.”
The Stoxx 600 has rallied 11 percent this year as central banks around the world maintained stimulus measures and the global economy showed signs of recovery. The index had declined 11 percent from May 22 through June 24 after the Fed said it may start reducing the pace of asset purchases if the economy improves in line with its forecasts. Federal Open Market Committee officials hold their next meeting on Sept. 17-18.
The volume of shares changing hands in Stoxx 600-listed companies was 23 percent higher than the 30-day average today, data compiled by Bloomberg show.
Obama said yesterday in an address from Washington that he will pursue a proposal by Russia to have Syria surrender its stockpiles of chemical weapons to international authorities. He had previously said he would ask Congress to authorize the use of military force against Syrian President Bashar al-Assad following an Aug. 21 chemical attack that the U.S. says killed more than 1,400 people.
“It’s too early to tell whether this offer will succeed, and any agreement must verify that the Assad regime keeps its commitments,” Obama said in remarks from the White House. The initiative “has the potential to remove the threat of chemical weapons without the use of force, particularly because Russia is one of Assad’s strongest allies.”
ARM jumped 4.8 percent to 986.5 pence, the biggest advance since April 23. Apple said late yesterday it will introduce two new iPhones, including a cheaper $99 version in bright colors and a high-end device.
The more expensive iPhone 5S will use ARM’s latest 64-bit technology, which carries a higher royalty rate and a greater chip value than current 32-bit technology, Andrew Dunn, an analyst at RBC Capital Markets, wrote in a report.
Nokia Oyj gained 3.9 percent to 4.42 euros after Berenberg Bank raised its recommendation on the Finnish phone maker to buy from sell, citing a stronger infrastructure business and an undervalued patent portfolio.
A gauge of utilities was the best performer among 19 industry groups in the Stoxx 600. EON, Germany’s largest utility, advanced 4.8 percent to 13.45 euros and RWE, the second-biggest, climbed 6.6 percent to 25.06 euros.
Banco de Sabadell SA, Spain’s fifth-largest bank, surged 9.7 percent to 2 euros. That was the biggest gain in a month and the largest advance in the Stoxx 600 today.
Kingfisher dropped 2.7 percent to 408.5 pence after Europe’s biggest home-improvement retailer said first-half adjusted pretax profit fell 1.6 percent to 365 million pounds ($574 million). That missed the 367 million-pound average forecast of analysts surveyed by Bloomberg.
Gemalto NV, which provides near-field communications technology solutions that enable contactless payment for mobile phones, sank 6.4 percent to 78.65 euros for the biggest drop in two years. Apple yesterday refrained from incorporating such so-called NFC technology in its latest iPhone versions. The Dutch company has still surged 35 percent from its May 10 low.
“The rally in Gemalto was overdone,” said Hedy Talens, a trader at Waerdeveldt BV in Amsterdam. “It was disappointing that Apple didn’t have a big surprise and didn’t present NFC.”
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