Europe Stocks Rally to 2015 High as BP, Aberdeen Rise on Resultsby
European stocks climbed as markets reopened after a holiday, boosted by gains in defensive shares and better-than-expected results from BP Plc and Aberdeen Asset Management Plc.
The Stoxx Europe 600 Index added 0.8 percent to close at the highest level in almost 21 months. Technology, construction and real estate companies led gains, while mining stocks lagged. The equity benchmark rallied to the highest level since August 2015 last week amid optimism over the first-round outcome of the French presidential election.
- BP gained 1.6 percent after its first-quarter earnings beat estimates, helped by higher oil prices and cost cuts. Aberdeen added 4.3 percent after outflows slowed in the first half of the year, and revenue topped projections.
- Equity risk-reward balance is worsening after a strong outperformance by cyclical shares over defensives, JPMorgan Chase & Co. strategist Mislav Matejka wrote in a note, while saying the medium-term backdrop remains constructive.
- After years of disappointments, European companies are finally living up to market expectations, enjoying their best earnings season in almost seven years.
- Bernstein strategists including Alla Harmsworth forecast European equities may rise 14 percent in the next 12 months, saying the global reflation trade will continue. They upgraded euro-area banking shares to overweight from underweight, according to a note.
- Ocado Group Plc jumped 5.8 percent after a report it plans to discuss a delivery tie-up with Marks & Spencer Group Plc.