European companies shot up to 10% and infected investors with optimism

Peter Wennink, CEO of the company, stated that although With economic uncertainty and rising semiconductor inventories clouding the outlook, customers expect conditions to improve towards the end of the year and the Chinese economy to recover after the end of COVID-19 restrictions.

“That means that the demand is still higher than what we can manufacture”, he claimed. ASML’s shares were lower after the results were released, after recently rising to their highest level since last April.

Shares of low-cost airline easyJet soared more than 10%, reaching its highest level since June, after announcing that it expects to exceed market expectations this year thanks to the strength of the reserves for the summer.

Its competitors Ryanair, Wizz Air and IAG, which owns Iberia and British Airways, also rose.as investors welcomed the latest evidence that people will not sacrifice their holidays even as double-digit inflation leaves less money to spend.

The French train manufacturer Alstom, favored by strong orders in Europe, posted an 8% increase in its third-quarter sales. Its shares hit their highest level in nearly a year.

Although it is still early days for corporate earnings season to start, the published results offer some hope that the recent economic data that has lifted equities this month is grounded in reality.

Expectations of a soft landing for the economy in 2023 have grown as a result of the reopening of China after three years of a ‘zero COVID’ strategy and the fact that Europe has managed to keep the lights on during the winter, helped by warmer weather and increased energy capacity.

IMF Managing Director Kristalina Georgieva said last week that the outlook was better than feared just a few months ago, so the Fund’s new global growth forecast for 2023which will be released soon, could be revised up slightly from the current 2.7%.

Even Germany, one of the economies most exposed to the spike in energy prices last year, could now dodge recession in 2023.

The head of the French Central Bank, François Villeroy de Galhau, also said last week that the euro zone was more resilient than expected and should avoid a recession this year.

This increased economic optimism has in turn raised hopes that the business recession will not be as severe as feared just a few weeks ago.

The pan-European STOXX 600 index is up more than 6% since the start of the year and last week reached its highest level since April, following better-than-expected economic data. The indicator is heading for its best January since 2015.

Thursday’s results from other heavyweights such as SAP, Nokia and LVMH will be further proof.

However, earnings and revenue expectations for the fourth quarter of 2022 have dimmed further, with data from Refinitiv I/B/E/S on Tuesday suggesting that European companies will see little to no revenue growth.

Sentiment on Wall Street also turned around overnight, with Microsoft shares reversing gains in after-hours trading after the company warned that revenue growth in its computing business in Azure cloud would slow down.

Also, Not everything is rosy in Europe. Swiss fragrance and flavoring manufacturer Givaudan reported a slowdown in sales at year-end, This put additional pressure on margins in a year marked by high input costs and supply chain interruptions.

For its part, Swiss asset manager GAM issued a profit warning after experiencing negative asset flows, sending its shares down 2.5% in early morning trading.