By Geoffrey Smith
Investing.com -- The Covid-19 winter remains a hard slog in the near term, but European equities are getting used to looking forward to a brighter 2021.
Markets were broadly higher on Thursday after talks on a U.K.-EU trade deal appeared to grind slowly but surely to a solution that, while still far from optimal for either side, will at least avert total chaos on the borders come January 1.
For companies, meanwhile, the light at the end of the tunnel is becoming brighter and wider, allowing investors to look through still dismal economic and health data, on a day when Germany recorded its highest-ever number of new Covid-19 cases and French President Emmanuel Macron also tested positive.
For example, European car registrations fell some 14% in November as the second wave of Covid broke across the continent, even though showrooms stayed open in many countries. Yet you wouldn’t know it from looking at share price in the sector. The Stoxx 600 Automobiles & Parts index was up 0.4% by mid-morning in Europe and has ground out a 5% increase over the last month, for all that the newsflow on the public health front has been overwhelmingly negative.
Likewise, SSP Group (LON:SSPG), which owns chains of food outlets that operate in U.K. train stations and airports, reported its biggest ever annual loss of 426 million pounds ($575 million) before tax in the year through the end of September, on a 51% drop in like-for-like sales.
The company said in a statement that the three months through December had also been miserable with sales expected to be down 80% on the year. It also expects the first three months of 2021 to be “volatile”.
Yet SSP Group stock rebounded from an initial loss of 5% to be down less than 2%, still firmly in the range into which has settled since the game-changing announcement of Pfizer’s and BioNTech’s success in developing an effective vaccine against Covid-19.
And in the same vein, there was little to be cheerful about in the latest update from French aerospace supplier Figeac (PA:FGA), which continued to refuse to give guidance as it emerges from a nightmare year. The stock still rose 6.1%, ostensibly on the lack of any fresh negative surprises.
For others, meanwhile, there were further signs that the recovery is still well entrenched. Electricite de France (PA:EDF) stock rose 2.3% after it revised its basis operating profit target for the year up to 16 billion euros, while Villeroy & Boch (DE:VIBG_p), a German midcap that supplies tableware and ceramics to both business and household customers, revised its 2020 profit guidance higher for a second time, helped by buoyant online sales to its well-heeled private customers and a strong rebound in China. Villeroy & Boch stock rose 7.6% to a new post-pandemic high.