Europe has been enduring record-breaking summer temperatures, with two recent heatwaves hitting areas across the continent.
Western Europe, in particular, has sweated through its warmest-ever June, while the month was the fifth-hottest on record for Europe as a whole, according to analysts at Morgan Stanley.
June was also drier than usual in both Western and Southern Europe, the brokerage noted.
For companies, such soaring mercury levels can have both benefits and drawbacks on their operations.
For instance, brewers -- such as Heineken (AS:HEIN), Carlsberg (CSE:CARLb), Fevertree and Campari (LON:0ROY) -- can see sales lift in times of typical summer heat, the analysts said. Apparel retailers, along with some pubs and restaurants, can see tailwinds as well.
But extreme-high temperatures can negate these benefits by persuading more people to stay home, they flagged.
For travel, "coolcations" -- consumers looking to find more moderate climates to escape the heat -- has become an emerging trend, although hotel operators in Southern Europe are still outperforming counterparts in the northern part of the continent, the analysts said.
Meanwhile, heatwaves can offer support to gas prices, bolstering firms exposed to gas-fired power like Naturgy, Engie, SSE (LON:SSE), and RWE (LON:0HA0), they said. Veolia, which benefits from a potential uptick in distributed and treated water volumes, may also be boosted.
Countries with weak hydro generation could suffer on the other hand, they warned, highlighting names like Verbund (VIE:VERB), Enel (BIT:ENEI), A2A and Fortum (HE:FORTUM).
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. Climate adaptation solutions are also growing in importance as heatwaves like those in Europe this summer become more frequent, the strategists said.
"Agriculture will need biocontrol/biostimulant solutions for heat stress," they argued. BASF, Novonesis, ICL (TASE:ICL) Group, Yara and Croda (LON:CRDA) are all possibly exposed to this trend, they added.
