European shares lifted by miners and tech; Middle East in focus

[BENGALURU] European shares ended higher on Wednesday (May 13), led by gains in mining stocks, though caution lingered as investors weighed the economic impact of elevated oil prices driven by the Iran war.

The pan-European Stoxx 600 closed up 0.8 per cent at 611.42 points, recovering from a 1 per cent slide on Tuesday.

The basic resources index jumped 4.4 per cent to a record high, tracking higher base metal prices and leading sectoral advances. It is Europe’s best-performing sector this year.

With the first-quarter earnings season drawing to a close, corporate profits are expected to grow at their fastest pace in three years. European earnings are forecast to have risen 10.2 per cent in the quarter, according to LSEG-compiled data.

Earlier in the session, German drugmaker Merck lifted its full-year adjusted operating profit forecast, sending its shares up 7.2 per cent.

Allianz rose 1 per cent after the insurance company posted a 52 per cent jump in first-quarter net profit, while ABN Amro added 8.6 per cent after beating quarterly profit estimates, marking its biggest daily gain since February last year.

“When you look at earnings growth for the whole year ... that would be quite an improvement from the past years, so we are a bit cautious on that to see if that will be realised,” said Joost van Leenders, senior investment strategist at Van Lanschot Kempen.

Despite Wednesday’s gains, the Stoxx index has underperformed Asian and US peers due to Europe’s lower exposure to AI hardware stocks.

The Stoxx 600 is up 4.7 per cent this quarter, compared with a 13.8 per cent rise in the S&P 500 and rallies of about 30 per cent and 55 per cent in benchmark indexes in Taiwan and South Korea, respectively.

SEE ALSO

European shares rise as oil prices slip on fragile US-Iran ceasefire

European semiconductor stocks Infineon Technologies, STMicroelectronics and Aixtron each gained about 10 per cent on Wednesday.

“Europe has not had the type of rally that the US and some of the Asian countries have had, (and) it’s not out of the question for global investors to look at European shares and say, there’s a relative value trade here,” said Steve Sosnick, chief market analyst at Interactive Brokers.

Globally, investors were focused on a high-stakes summit in China, where US President Donald Trump is meeting his counterpart Xi Jinping.

Investors are watching whether Trump will press China to use its ties with Teheran to open up the Strait of Hormuz, with Iranian restrictions keeping oil prices above US$100 a barrel despite a ceasefire between Washington and Teheran.

Rising inflation risks have pushed money markets to price in more than two European Central Bank rate hikes by year-end. REUTERS