Europe: Strong results lift Stoxx 600 to near seven-week highs

EUROPEAN shares scaled near seven-week highs on Wednesday as a string of strong results from companies including Russia-exposed lender UniCredit and Britain’s Smurfit Kappa provided some comfort in an otherwise gloomy environment.

The Stoxx 600 index closed 0.5 per cent higher, with shares of French IT consulting firm Atos surging 16.2 per cent to top the index on securing financing for a turnaround plan.

UniCredit gained 8.6 per cent after it raised its 2022 outlook and moved ahead with a proposed share buyback it had put on hold, helping Italy’s MIB index outperform its peers with a 1.5 per cent climb.

Sentiment also got a lift after an upbeat outlook from Microsoft Corp and strong ad sales growth by Google parent Alphabet Inc overnight, with analysts also pointing out that a lot of disappointment in terms of earnings were already baked into valuations.

“You can argue that much of it was, because through the second quarter we have had a big de-rating pretty much across all markets, there was some degree of disappointment priced in,” said Ian Williams, economist and strategist at Peel Hunt.

“It feels maybe now investors are assessing the company updates more on stock by stock basis against the background of concerns about growth, European gas supply and how much tightening the central banks are going to do to try and check off inflationary pressures.”

Second-quarter earnings for companies that are part of the Stoxx 600 are expected to increase 23.1 per cent from a year earlier, according to Refinitiv.

Of the 35 per cent that have reported so far, nearly 60 per cent have topped estimates.

Russia delivered less gas to Europe in a further escalation of an energy stand-off between Moscow and the European Union that will make it harder, and costlier, for the bloc to fill up storage ahead of the winter heating season.

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The travel and leisure sector rose 3 per cent, getting a boost from positive comments from Wizz Air. The low-cost airline’s shares jumped 10.4 per cent after its quarterly revenue more than quadrupled and it said demand for travel was underpinning higher ticket prices.

French payment company Worldline climbed 13.8 per cent on upbeat first-half results. Smurfit Kappa added 5.5 per cent after Europe’s largest paper packaging producer posted a 50 per cent jump in first-half core profit and raised its interim dividend.

Miner Rio Tinto slipped 0.7 per cent after a drop in first-half profit, while Adidas slid 5.1 per cent after cutting its 2022 earnings target, blaming a slower-than-expected recovery in China from pandemic restrictions. REUTERS