European shares shrug off HSBC miss as other earnings, oil relief lift sentiment

STRONG earnings and a pullback in crude prices helped European shares close higher on Tuesday (Oct 27), erasing losses from earlier in the session when HSBC weighed on sentiment following a quarterly revenue miss.

The pan-European Stoxx 600 index rose 0.47 per cent to 643.68 points, after falling as much as 0.41 per cent earlier in the day.

The gains place the index on a potentially stronger footing ahead of the European Central Bank’s rate decision, due on Thursday, where policymakers are expected to keep borrowing costs steady.

“We expect (ECB) President (Christine) Lagarde to strike a balanced message between ongoing upside risks from energy prices, benign underlying inflation data and tighter financial conditions,” Goldman Sachs analysts wrote.

Austrian circuit board manufacturer AT&S and Dutch chip toolmaker Besi were the top gainers on the index, rising 11.5 per cent and 11.4 per cent, respectively.

US semiconductor equipment maker Applied Materials said it would increase its stake in Besi to about 20 per cent.

Switzerland’s SIG Group also rose around 10 per cent after beating sales estimates for the third quarter.

“The earnings results, generally speaking, have been pretty solid,” said Richard Flax, chief investment officer at Moneyfarm.

However, there is some wariness among equity investors about assuming the very strong growth results seen so far will continue, he added.

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Results from HSBC, Europe’s largest bank, bucked a recent trend of strong performances in the banking sector, disappointing investors.

Shares of the London-based bank fell more than 5 per cent, touching a more than four-month low after its revenue missed estimates, in part due to slower growth at its wealth business.

The declines dragged Britain’s FTSE 100 0.75 per cent lower.

French equities inched 0.51 per cent higher after falling more than 2 per cent last week as protests rattled the eurozone’s second-largest economy.

Student leaders have vowed to go on protesting despite government concessions on education, as the movement spreads to unions and other activists.

French consumer confidence fell in October to its lowest level since June 2013, data showed on Tuesday.

Among other movers, Novartis raised its full-year core operating income guidance, sending shares of the Swiss drugmaker up 1 per cent.

The technology index traded around 2 per cent higher, tracking global optimism in the wake of Anthropic’s IPO filing, while miners gained over 2 per cent, tracking higher base metal prices. REUTERS