Europe: Shares end second week higher; tech records worst week of the year
EUROPEAN shares rose on Friday (Jul 22) to end the week higher, while German stocks lagged as SAP’s bleak revenue forecast weighed on the tech sector, which also recorded its biggest weekly drop this year.
SAP fell 4.2 per cent after the business software maker trimmed its full-year outlook for key cloud sales, dragging Germany’s DAX index down 0.2 per cent.
The pan-European Stoxx 600 index edged 0.3 per cent higher, rising for the fourth straight session.
Europe’s technology sector, which fell 4.8 per cent to be top decliner among major sectors this week, slipped 0.4 per cent on the day.
The mining sector declined 1.5 per cent, hurt by some disappointing results.
Swedish steelmaker SSAB slumped 13.8 per cent to the bottom of the Stoxx 600 after its operating profit halved in the second quarter, while Norsk Hydro fell 2.2 per cent after the Norwegian aluminium producer raised its capital expenditure guidance.
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The Stoxx 600 rose 0.9 per cent for the week, largely driven by a rally in British shares following evidence of slowing domestic inflation.
But concerns about China’s weak economic recovery and weakness in the technology sector amid the earnings season capped gains.
The UK’s FTSE 100 posted 3 per cent gains this week, its best in nearly four months.
Investors are now focussed on another round of major central bank policy meetings next week for more clues on the global interest rate trajectory.
Deutsche Bank said it expected the European Central Bank to hike the deposit rate by 25 basis points to 3.75 per cent on Jul 27, but added that a further hike in September cannot be ruled out given the ECB’s commitment to bringing inflation under control.
“Focus is on full calendar and rate decisions next week,” said Axel Rudolph, senior market analyst at IG.
“Rate decisions by the Fed, ECB and BoJ next week alongside flash PMIs, consumer sentiment, GDP and inflation data will likely add some volatility to the mix.”
Thales slipped 4.8 per cent despite a guidance raise by the defence electronics firm, with Jefferies pointing to revised forex assumptions weighing on the outlook.
Ubisoft jumped 5.2 per cent, after the French video game producer’s first-quarter net bookings came above guidance.
Lonza slid 11.1 per cent after the Swiss contract drug manufacturer cut its full-year outlook.
SBB tumbled 12.9 per cent after the Swedish property group and Brookfield ended talks on the sale of SBB’s remaining 51 per cent stake in its education subsidiary EduCo. REUTERS
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