European stocks fell but rose for the sixth consecutive month Reuters

Authors: Sruthi Shankar and Shreyashi Sanyal

(Reuters)-European stock markets fell from historical highs on Friday as concerns about the rapidly spreading Delta variable and Chinese regulatory actions overshadowed optimism about the quarterly earnings season and economic recovery.

The pan-European index fell 0.5%, but rose for the sixth consecutive month in July, which is the longest consecutive rise since the 12-month rise in 2012-13.

CMC Markets chief market analyst Michael Hewson said: “This week we have seen trends in two directions, but they lack any conviction.”

“The most worrying thing is whether the second half of this year can match some of the good numbers we have seen from various company updates this week.”

Travel and leisure stocks and mining stocks suffered the most.

Italy’s UniCredit rose 2.8% after announcing a higher-than-expected net profit, and said late Thursday that it had begun formal negotiations with the government on the possible acquisition of rival Monte dei Paschi di Siena. Monte dei Paschi rose 3.4%.

EssilorLuxottica rose 3.4% because the Ray-Ban manufacturer raised its full-year guidance after doubling its revenue in the second quarter.

According to data from Refinitiv IBES, overall, 67% of the STOXX 600 index companies that have released reports so far have exceeded analysts’ expectations. Although this is lower than the 72% beat rate in the first quarter, it is still higher than the 51% beat rate in a typical quarter.

Invesco Europe Equity Fund Manager Oliver Colin said: “We have had extraordinary expectations, but these companies have successfully exceeded those expectations.” “What’s interesting in Europe is that the beats that are quite different from those in the United States are in a positive way. The share price momentum paid off.”

Colin believes that European stock markets are biased towards cyclical industries with low valuations and the strong recovery momentum in the second quarter has prompted a positive market response in the near term.

Preliminary data shows that as the euro area rebounded from the recession caused by the COVID-19 pandemic, the euro area’s economy grew faster than expected in the second quarter.

British Airways (British Airways) owner IAG (LON:) dropped 7.5% after stating that summer capacity will rise to 45% of pre-pandemic levels, but warned that there are still major uncertainties.

German healthcare group Fresenius (Fresenius) fell 3.9% after raising its 2021 profit guidance, but is cautious about new virus variants and stagnant vaccination progress.