-- Europe’s stock markets are broadly higher on Tuesday on hopes that another U.S. government shutdown can be avoided, and on the back of some positive earnings surprises.
Automakers and their suppliers are faring well after French tiremaker Michelin (PA:MICP) raised its dividend and gave a solid – if still ‘mixed’ – outlook for 2019. Its shares, which lost over 30% in 2018, rose over 10%, also pulling rivals Continental (DE:CONG) and Pirelli (MI:PIRC) higher.
The Stoxx 600 Automobiles & Parts index was up 2.1% by 04:45 AM ET (0945 GMT), while the benchmark Stoxx 50 was up 0.7% at 3,189.15.
Tiremakers, like most automotive stocks, have been seen by some analysts as oversold after a relentless stream of bad news last year, most of it related to the U.S.-China trade war.
The news continues to be largely negative – Nissan slashed its profit forecast by nearly 20% this morning for the fiscal year ending in March, and there is no sign of a breakthrough yet in the trade talks between U.S. and Chinese officials in Beijing. But the reaction to the Michelin numbers suggest that, for now at least, more than enough bad news has been priced in already.
Elsewhere, Gucci owner Kering (PA:PRTP) more than met expectations for the fourth quarter, but its shares added only 0.6% after rallying 14% already this year on the back of strong earnings from its peers in the luxury sector.
While all the noise around luxury groups has been mainly about Chinese demand holding up well, it was the U.S. which gave Kering the biggest kick to sales last year: revenues from North America rose 37.8%, while those in Asia-Pacific rose ‘only’ 33.8%.