Europe: Shares tread higher on ASML, earnings boost

EUROPEAN shares gained on Wednesday with heavyweight ASML jumping on a report that the Dutch chip equipment manufacturer would be exempted from a new US rule on foreign chip equipment exports, while a slate of positive earnings further aided gains.

The pan-European Stoxx 600 index finished 0.8 per cent higher, touching an over two-week high earlier in the session, clocking a monthly advance of over 1 per cent.

The tech sector led gains across the major Stoxx sectors, jumping 2.6 per cent with ASML surging 5.6 per cent following a Reuters report that signalled it may be spared many of the new US restrictions being considered on exports to China.

The aerospace sector added 1.3 per cent, with Airbus climbing 4.8 per cent after the world’s largest planemaker published better than expected second quarter results.

London-listed shares of HSBC gained 4 per cent after the lender announced a US$3 billion share buyback and upgraded its income outlook.

Macro-data remained in focus, with a fresh reading showing euro zone inflation unexpectedly edged up in July, although a widely watched gauge of price growth in the services sector eased.

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“Despite the headline re-acceleration, there are details that should be pleasing to the ECB. Services inflation has slowed from 4.1 per cent to 4.0 per cent year-on-year, which (is) a component that the ECB is very much focused on,” said Janet Mui, head of market analysis at RBC Brewin Dolphin.

“Analysing all the data, there is still a high likelihood that the ECB will be cutting again at its September meeting.”

Meanwhile, the Federal Reserve will conclude its two-day policy meeting later in the day where investors expect the US central bank to lay out groundwork for a September cut.

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The Bank of England’s monetary policy committee will also meet on Thursday to take a call on British borrowing costs.

Spain’s benchmark equity index bucked the trend, clocking a 1.2 per cent decline.

Spain’s BBVA reported a slower net profit growth in its main market in Mexico in the second quarter, overshadowing a 38 per cent year-on-year rise in overall profit that topped market expectations. Its shares fell over 4 per cent as the lender will not buy back more shares until its offer for rival Sabadell finishes.

Amongst other headlining stocks, French office services and call centre company Teleperformance added 10.4 per cent after strong first-half results that revealed improving business trends, and confirmed full-year guidance indicating the pursuit of shareholder returns.

Schneider Electric rose 3.1 per cent after the French group reported better-than-expected first-half earnings and raised its outlook. REUTERS