European Shares Reach New Highs Amid Positive Corporate Updates

European shares surged to new record highs on Wednesday, buoyed by gains in retail and utility stocks following upbeat corporate announcements. As investors eagerly awaited industrial production data from the region, the pan-European STOXX 600 index rose by 0.1% by 9:13 GMT, building on the momentum from Tuesday’s record-high close.

Retail Sector Leads the Charge

The retail sector emerged as the top performer, with the SXRP index gaining 2.5%, driven by a remarkable 13.6% surge in Zalando shares. The online fashion retailer reported a fourth-quarter profit beat and announced a share buy-back program, signaling confidence in its growth prospects and improved profitability in 2024. Additionally, Zara-owner Inditex saw its shares soar by 4.5% following higher sales at constant currencies in the first half of its spring season, buoyed by strong demand for upmarket fashion offerings.

Utilities Sector Rallies on Positive Outlook

E.ON, Europe’s largest operator of energy networks, witnessed a 5.0% surge in its shares after raising its five-year investment target to 42 billion euros ($46 billion) and providing 2024 profit guidance that exceeded expectations. This optimistic outlook propelled the broader utilities index up by 1.1%, reflecting investor confidence in the sector’s growth potential.

Corporate Deals and Headwinds

Vallourec shares climbed 6.4% after steelmaker ArcelorMittal announced the acquisition of a 28.4% stake in the France-based company for approximately 955 million euros ($1.04 billion), aiming to bolster its presence in the tubular business. However, Adidas shares faced headwinds, declining by 1.9% after the sportswear giant reported its first loss in over 30 years in 2023. Additionally, Adidas projected a decline in North America sales this year following the termination of its collaboration with rapper Kanye West in 2022, resulting in the suspension of sales of the lucrative Yeezy sneaker line.

Awaiting Euro Zone Industrial Production Data

Investors eagerly awaited the release of euro zone industrial production data for January, scheduled for 1000 GMT, to gain further insights into the region’s economic resilience and the potential initiation of an interest rate cut cycle.

Overall, upbeat corporate updates have instilled a risk-on sentiment among European investors, reflecting optimism about economic recovery and driving investment in riskier assets despite persistent inflation concerns.