European stocks: European stocks inch towards record high as PMIs, chip rally support

European stocks kicked off the new quarter with gains on Thursday, as optimism around a new U.S. government spending plan and strong factory activity data out of the euro zone eclipsed concerns about another lockdown in France.

The pan-European STOXX 600 index rose 0.5 per cent, hovering just 2 points below its all-time high. The benchmark ended the first quarter with a 7.7 per cent rise – its fourth straight quarter of gains.

The German DAX climbed 0.6 per cent to hit a record high, while the UK’s FTSE 100 also gained 0.6 per cent.

Despite slow vaccination programmes and a fresh pandemic wave hitting several countries, European markets have recovered almost all of their pandemic-driven losses on strong manufacturing activity and a bounceback in economy-linked stocks such as banks and energy.

Data showed euro zone factory activity growth galloped at its fastest pace in the near 24-year history of a leading business survey in March.

“We remain optimistic on the recovery and believe current vaccine delays in the EU are unlikely to jeopardise the rebound in growth: the supply of vaccines is set to improve significantly in 2Q/3Q,” analysts at Equita wrote in a note.

Helping global sentiment further, U.S. President Joe Biden unveiled a sweeping $2.3 trillion spending plan on Wednesday that includes investments in roads, railways, broadband, clean energy and semiconductor manufacture.

Chip stocks including those of ASML, ASMI , Infineon Technologies BE Semiconductor all rose between 1.2 per cent and 4 per cent after U.S. chipmaker Micron Technology issued an upbeat revenue forecast.

Also boosting the sector, contract chipmaker TSMC said it plans to invest $100 billion over the next three years to increase capacity at its plants.

British food delivery firm Deliveroo’s shares inched down 0.8 per cent after plunging by as much as 30 per cent in their trading debut on Wednesday.

German peer Delivery Hero jumped 3.4 per cent after Dutch tech investment company Prosus NV raised its stake in the company.

France’s blue-chip CAC 40 lagged after the latest lockdown announcement.

Catering companies Sodexo and Elior slipped even as Sodexo forecast an expansion of second-half revenue after reporting a large beat on its first-half profit margin.

Swiss lender Credit Suisse rose 2.5 per cent, but was on track for its worst week since March 2020, hit by worries about the fallout from Archegos Capital’s dramatic meltdown.