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Europe: Earnings, resources stocks help shares hold at 21-month highs

Wednesday, May 10, 2017 - 06:46

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[LONDON] A raft of well-received updates and a recovery in resources stocks helped European shares rebound on Tuesday from the previous session's slight losses, ending at fresh 21-month highs.

The pan-European STOXX 600 index rose 0.45 per cent while France's CAC 40 index gained 0.3 per cent, recouping some of its losses from Monday following centrist Emmanuel Macron's French presidential election victory. "Yesterday was almost a realisation that, OK, we've cleared one hurdle but it's not like it's plain sailing from here ... But today it's looking good - the weak euro vs. the dollar is helping the DAX," Mike van Dulken, head of research at Accendo Markets, said, referring to Germany's index, which rose 0.4 per cent to a record high.

Company results were in focus, with shares in Italy's David Campari jumping 4.4 per cent after the spirits maker reported first-quarter earnings boosted by high-margin brands.

Denmark's payment services provider Nets rose 2.9 per cent following its first-quarter earnings, which saw strong organic growth.

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More than halfway into the first-quarter results season, earnings for European firms have been strong overall, with major euro zone blue chip firms seeing average earnings growth of around 20 per cent, according to Thomson Reuters data.

Elsewhere a rebound in basic resources stocks and gains among energy firms also helped support the market, with miners up after a rise in the underlying price of copper.

Shares in Belgian materials group Umicore rose 3.3 per cent, supported by a positive broker note from Berenberg whose analysts also upped their target price for the stock. Likewise Henderson's shares gained 2.3 per cent after UBS upgraded the asset management firm to "buy" from "neutral", citing its planned merger with US fund firm Janus Capital.

"Significantly enhanced scale, distribution and diversification see (Henderson) better equipped to deal with ongoing headwinds from a gradual global shift to passive and rising regulatory costs," analysts at UBS said in a note.

Shares in jewellery maker Pandora gave up early gains to end down 6.6 per cent lower after its update, while Apple supplier Dialog Semiconductor retreated 0.2 per cent with analysts pointing to the chipmaker's weaker guidance for the second quarter in which it expects to see a dip in revenues.

Britain's Micro Focus slumped 5.6 per cent after saying that revenue at Hewlett-Packard Enterprise, the US company it is buying, dropped around 10 per cent in the last quarter.

British utility Centrica came under pressure after Prime Minister Theresa May pledged to cap energy prices if she is re-elected in June's general election. Centrica's shares fell 1.2 per cent.

REUTERS

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