(Bloomberg) -- Beaten-down European automakers are taking some encouragement from the early days of earnings season.
The Stoxx 600 Autos and Parts Index rose as much as 2.3% on Thursday, its third straight day of gains, after updates from Renault SA and Tesla Inc. added to optimism instilled by General Motors Co.’s third-quarter beat. News that China is putting pressure on its automakers to pause expansion in the European Union due to the escalating trade conflict only reinforced the brighter mood.
The rally eased this year’s declines in European automakers, which are still the worst performers in the broader benchmark, down about 9%. Renault’s results and maintained guidance imply some resilience in the European consumer, a positive for the region’s original equipment manufacturers, according to Morgan Stanley analysts including Ross MacDonald.
Still, many remain skeptical of the outlook for a sector that’s been weighed down by waning demand from Chinese consumers, a slowdown in the adoption of electric vehicles and growing threats of a global trade war. Hyundai Motor Co.’s earnings on Thursday showed the impact of tepid vehicle sales around the globe, and expanded geopolitical risks.
While there’s always scope for a rebound, “I expect it will be fairly short lived in the current climate,” said Haig Bathgate, head of investments at Atomos.
Coming days will reveal more. European carmakers Volkswagen AG, Mercedes-Benz Group AG, and BMW AG are among those due to report, with implied one-day share price changes — calculated via options trades on stocks — ranging between 2% and 4%.
Attention will also be on Stellantis NV, which with a year-to-date drop of about 40% is the worst performer by points in the Stoxx 600 autos index. UBS Group AG analyst Patrick Hummel is among those who now view the stock as cheap, though he remains cautious on the sector.
In the US, Ford Motor Co. results are scheduled for Monday, in a week that auto suppliers including Gentherm Inc. and Monro Inc. will also report. And in China, sector bellwether, BYD Co., is widely expected to announce its best-ever quarterly sales next Wednesday.
--With assistance from Esha Dey and Charlotte Yang.
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