European stocks charge higher as Airbus, commodity shares advance
European stocks on Thursday pushed higher, with Airbus SE shares soaring after a well-received financial update, as traders appeared to regain their appetite for riskier assets.
Meanwhile, weakness in the dollar was encouraging investors to load up on commodity-related shares.
Those moves were helping steer the regional equity market closer to breaking a run of weekly losses.
How markets are moving
The Stoxx Europe 600 index SXXP, +1.01% picked up 0.7% to 377.32, led by the basic materials and oil and gas groups. But on the losing end were the consumer goods and utilities sectors. On Wednesday, the pan-European index rose 1.1% in a volatile session.
Germany’s DAX 30 index DAX, +1.09% was up 0.6% to 12,416.43, adding to Wednesday’s jump of 1.2%. France’s CAC 40 index PX1, +1.69% surged 1.2% to 5,228.83, extending Wednesday’s rise of 1.1%.
Spain’s IBEX 35 IBEX, +1.24% leapt 1.1% to 9,795.30. The U.K.’s FTSE 100 UKX, +0.68% was up 0.5% at 7,251.47.
The euro EURUSD, +0.2731% bought $1.2488, up from $1.2452 late Wednesday in New York.
In the fixed-income market, the yield on the 10-year German bund TMBMKDE-10Y, +4.52% rose 2 basis points to 0.774%, according to Tradeweb.
What’s driving the market
Investors appeared solidly on board to take on risk, with the oil and mining sectors gaining. The falling U.S. dollar aided most commodities with dollar-denominated prices, such as copper HGH8, +0.00% and oil CLJ8, +0.56% . Crude oil prices were building on Wednesday’s rally, which was also bolstered by data showing a smaller-than-expected rise in weekly U.S. crude inventories.
Stronger-than-expected U.S. inflation data and rising Treasury yields initially lifted the greenback on Wednesday, but that was accompanied by data showing an unexpected drop in U.S. retail sales. Those mixed signals may have helped sink the dollar, analysts said.
European stocks advanced even as the euro approached $1.25 for the first time since early February, as the dollar dropped. Euro strength can hurt sales of European products in overseas markets, and in turn hurt shares of those exporters.
With one trading day left this week, the Stoxx Europe 600 was looking at a weekly rise of 2.4%. That would mark the first win in four weeks.
Check out: Here’s why the U.S. dollar isn’t getting much love
What strategists are saying
“There was an appreciable initial knee-jerk push of dollar strength [Wednesday], however this turned completely around as the outlook showed inflation was beginning to turn a corner, but not spiking higher in a sense that would have resulted in a massive and sustainable risk-off move,” said Richard Perry, an analyst at Hantec Markets.
“Rising inflation in a controllable fashion is positive for markets and retains an outlook of dollar negativity,” Perry said in a note.
Airbus SE shares AIR, +10.13% rallied 9.5% in Paris. The European plane maker said it’s starting to reap the benefits of higher production that helped it generate a higher-than-expected €2.95 billion ($3.68 billion) in free cash flow before mergers, acquisitions and customer financing.
Nestlé SA NESN, -2.28% fell 2.4% after the Swiss consumer goods producer said a key measure of sales growth came in at 2.4% in 2017, the slowest pace in decades.
The Stoxx Europe 600 Basic Materials index SXPP, +2.68% leapt 2.5% and the Stoxx Europe 600 Oil and Gas index SXEP, +1.10% charged up 1.2%.
Within the first group, miner Glencore GLEN, +2.86% popped up 3.1%, and steel maker ArcelorMittal SA MT, +2.75% rose 2.6%. Oil producer Royal Dutch Shell PLC RDSB, -0.24% RDS.B, +1.94% added 1.4%.
Financial company Standard Life Aberdeen PLC shares SLA, -4.19% dropped 4.6%. It said Lloyds Banking Group PLC LLOY, +1.50% and Scottish Widows have given notice to end the £109 billion ($151.7 billion) investment-management arrangement that was reached in 2014. Lloyds shares climbed 1.3%.
European Central Bank