May 7, 2024
Today at
10:14
Surprising leader in 2024 in the European stock market rally: the banks.
No trace of spring fatigue on the European stock markets. The Bel20 climbs in Brussels
0.8 percent higher to 3,961 points. The basket of shares is now within sight of the 4,000 point mark again, a thousand that was most recently on the boards in May 2022.
The signs are also turning green elsewhere in Europe: the Dutch AEX
wins just under half a percent and comes close to 900 points for the first time. The Euro Stoxx50
the basket of star shares of the eurozone, is up 0.3 percent, bringing its gain since New Year to 10 percent.
The rally received fresh fuel last week thanks to regained optimism about a first interest rate cut by the US central bankers later this year.
The star stock of the Euro Stoxx50 this year is far from the usual suspect: UniCredit. The Italian major bank has gained 47 percent so far this year and highlighted this rediscovery with a strong quarterly report: net profit rose a quarter to 2.6 billion euros. CEO Andrea Orcel also promises to transfer at least as much as the 8.6 billion for 2023 to shareholders for the whole of 2024. That will be almost the entire net profit, which must amount to ‘at least 8.5 billion’.
The Swiss major bank UBS also posted a better-than-expected net profit of $1.8 billion for the first quarter on Tuesday morning. In particular, the report highlights that UBS made an excellent deal last year by acquiring rival Credit Suisse at well below book value. UBS shoots 8 percent higher after the figures.
The Stoxx Banks index has gained 17 percent since New Year, giving the banks by far the best performance of all sectors, and is now at its highest level since the summer of 2015.
Investors in other industries also see the glass as half full instead of half empty with almost every report. The chemical group Solvay
started 2024 better than expected, but CEO Philippe Kehren nevertheless maintains the fairly gloomy annual forecast. Analysts suspect that Kehren may have room later this year to narrow the range – an operating profit that is a tenth to a fifth below that of 2023.
The same with Infineon
. The German chip designer, a rival to Melexis in car chips, tempered its annual forecasts. But investors prefer to focus on the forecast for the current quarter, where sales would improve compared to the previous quarter. The conclusion is that the bottom of the cycle has been reached.
