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The Stoxx Europe 600 hit a record high on Wednesday as fears over US tariffs eased and investors bought cheaper European stocks following strong corporate earnings.
The broad-based European index rose as much as 0.7 per cent to a record high of 529.88, fuelled by gains for some of Europe’s largest companies, such as Danish drugmaker Novo Nordisk and Germany’s Adidas.
Frankfurt’s Dax rose more than 1 per cent — also to a fresh high — led by a 7 per cent gain for Adidas following strong full-year from the sports goods maker.
Luca Paolini, chief strategist at Pictet Asset Management, said a “risk-on environment [is] lifting all boats, especially the weakest”, helped by other factors including concerns over US tariffs easing a little.
In spite of threats, new US President Donald Trump has yet to impose tariffs on goods exported to the US from the bloc.
“There is a bit of relief on the view that Trump is more soft than the market thought,” said Emmanuel Cau, an analyst at Barclays.
“The [European] market is not that scared of Trump any more as he gives the impression that he is trying to negotiate,” he said.
US futures also pointed to gains on Wall Street after streaming service Netflix beat earnings estimates. S&P and Nasdaq futures were up 0.4 per cent and 0.8 per cent respectively.
London’s FTSE 100 also moved further into record territory, up 0.3 per cent, boosted by energy and mining stocks.
The highs came after a Bank of America survey of European fund managers this week showed that investors had raised their allocations to European equities as fears grow over high valuations on Wall Street.
Only 19 per cent of fund managers were overweight US stocks in January, down from a record 36 per cent the previous month. The shift was the biggest rotation from US stocks into Eurozone stocks in almost a decade.
The S&P is trading on a forward price/earnings ratio of 21 times, while the Stoxx Europe is trading at just 13 times.
Trump also said on Tuesday that his administration was discussing imposing a 10 per cent duty on Chinese imports as early as next month. He revealed on Monday that he would enact tariffs of 25 per cent against Mexico and Canada as soon as February 1.
