European stocks are set to hover near three-month highs next week as investors search for clues on the direction of interest rates and monitor the dwindling stream of earnings as they try to push the market higher.
The world's biggest miner, BHP Billiton, and Swiss food group Nestle dominate the corporate reporting calendar, while Germany's Ifo business climate index and ZEW investment sentiment survey stand out among economic events.
"Equity markets in general have taken the view that we are near the peak of interest rates globally and yet the world economy is still running along okay," said Chris Iggo, strategist at AXA Investment Managers.
"It's going to be a soft landing and it's quite a benign environment for equities after the correction they suffered in May." The pan-European FTSEurofirst index of 300 leading shares was set to end the week up around 2.3 percent, boosted by technology stocks as investors judged them to offer good value as US interest rates looked set to peak.
The index has now made up most of the ground lost between mid-May and mid-June when worries about higher interest rates sparked one of the biggest selling bouts in recent years.
The FTSEurofirst 300 is now only around 3 percent below a five-year peak of 1,407.52 points set in the first half of May, but volumes are likely to remain thin for the next few weeks with many traders and investors on summer vacation.
The upbeat corporate earnings season has helped support the positive market tone, with Citigroup calculating 40 percent of European companies have beaten its analysts' forecasts with higher dividends and capital returns proving encouraging.
"Corporate Europe remains in good health," said Citigroup strategists in a note.
"For sure, this results season contained evidence of a moderate slowdown in profitability, but the second quarter's exceptional season was always going to be a tough act to follow. There was not a collapse as some were predicting."
SPOTLIGHT ON BHP Mining giant BHP Billiton is set to dominate next week's reporting calendar when it post its preliminary year results on Wednesday, with investors keen to see how it benefited from strong global mineral demand.
Nestle, the world's largest food company, also reports its first-half earnings on Wednesday. Elsewhere, Bang & Olufsen and Acciona report on Monday, followed by Tandberg, Intercontinental Hotels, Persimmon and Vontobel Holding on Tuesday.
Wednesday sees results from Telecom Austria, with Agfa-Gevaert and Rentokil following suit on Thursday. Belgacom reports on Friday.
Germany's ZEW August survey is due for release at 0900 GMT on Tuesday while the Ifo business climate index for August will be released at 0800 GMT on Thursday.
Comments
Comments are closed.