Euro­pean shares rise for fourth con­sec­u­tive week

The Malta Independent on Sunday - - BUSINESS & FINANCE -

Euro­pean shares rose for the fourth con­sec­u­tive week on Fri­day as con­fi­dence over the re­gion’s eco­nomic re­cov­ery out­weighed wor­ries over the Cat­alo­nia cri­sis, whose im­pact re­mained con­fined to Span­ish eq­ui­ties.

While Spain’s IBEX ended a tu­mul­tuous week down 1.9 per­cent af­ter a banned ref­er­en­dum last week­end in the wealthy Span­ish re­gion over­whelm­ingly backed in­de­pen­dence, the pan-Euro­pean STOXX 600 in­dex posted a five-day gain of 0.3 per­cent.

Redemp­tions in Span­ish stock funds hit their high­est level in nearly three years over the past week as in­vestors be­came alarmed by the con­fronta­tion be­tween Madrid and Cat­alo­nia, EPFR Global data showed.

But flows into Euro­pean eq­uity funds ex­ceeded $1 bil­lion for the third week run­ning as the re­gion’s eco­nomic re­cov­ery re­tained its mo­men­tum.

Credit Suisse In­ter­na­tional Wealth Man­age­ment Chief In­vest­ment Of­fi­cer Michael O‘Sul­li­van said he did not ex­pect to change in­vest­ment strat­egy be­cause of events in Spain.

A weak­en­ing euro has sup­ported the ex­porter­heavy Ger­man in­dex, as well as the broader euro zone STOXX in­dex, which en­joyed its sixth straight week of gains, hold­ing near five-month highs.

The UK’s FTSE rose 0.2 per­cent af­ter Prime Min­is­ter Theresa May said she would stay on as leader to pro­vide sta­bil­ity as Bri­tain en­ters a cru­cial stage in Brexit talks.

The S&P 500 In­dex has climbed 3.6 per­cent in a month, the best pre-earn­ings sea­son in five years. If stocks an­tic­i­pate prof­its, in­vestors clearly ex­pect some­thing big when com­pa­nies start re­port­ing re­sults next week. How­ever, Wall Street an­a­lysts, have cut their es­ti­mates for S&P 500 in­come growth by more than half. At 3.6 per­cent, they’re now pre­dict­ing the big­gest slow­down since 2011 af­ter prof­its ex­panded about 11 per­cent in the March-June quar­ter.

While an­a­lysts al­ways lower their ex­pec­ta­tions head­ing into earn­ings sea­son, the 4.9 per­cent­age­point re­duc­tion is al­most dou­ble the av­er­age cut in the past year. All 11 industries suf­fered down­ward re­vi­sions, with fi­nan­cials and con­sumer dis­cre­tionary see­ing growth es­ti­mates go­ing from pos­i­tive to nega­tive.

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