Europe: Earnings beats from UBS, Peugeot fire up stocks

[LONDON] Strong results from bank UBS, car company PSA and chipmaker AMS propelled European stocks higher on Tuesday, breaking a three-day slide as the earnings season delivered a boost to the market.

Some of this year's worst-performing sectors - autos and banks - jumped thanks to these solid updates.

The pan-European Stoxx 600 accelerated gains to touch its highest level in more than a month, ending up 0.9 per cent, with heavyweight UBS among the biggest boosts, up 4.3 per cent after its second-quarter profit topped expectations.

Gains in UBS boosted the banks sector up 2.2 per cent, with Credit Suisse, Italy's Unicredit and Spain's BBVA climbing 2.2 to 3.6 per cent.

PSA Group jumped nearly 15 per cent after the Peugeot owner reported strong profits thanks to a turnaround at its newly acquired Opel-Vauxhall division.

The stock hit its highest level since June 2008, a 10-year high, and UBS analysts said the results would likely trigger upgrades to consensus full-year earnings of about 30 per cent.

PSA provided a boost to the autos sector which has been a main victim of US threats of higher tariffs on car imports. The sector index jumped 2.6 per cent, second only to basic materials which climbed 4.8 percent on stronger metals prices.

In an earnings season where investors are focusing on companies' outlook, guidance from several of them was particularly strong, driving sharp share price gains.

Austrian chipmaker and iPhone supplier AMS jumped as much as 13 per cent before paring some gains after the company said new orders would secure strong growth in the second half, and reported higher than expected second-quarter revenue.

"AMS has helped quell widespread concerns in the market regarding Apple's ramp of 3D sensing components for its new iPhones in the second half, by providing very strong guidance for Q3 2018," Liberum analyst Janardan Menon said.

Overall second-quarter earnings growth for the Stoxx 600 was expected to come in at 8.1 per cent year-on-year, stronger than the first quarter.

"Positive European earnings are continuing a theme we have seen with the US over the last few weeks which should help soothe concerns that the divergence between the US and Europe would have translated into even wider discrepancies in EPS growth," Edward Park, investment director at Brooks Macdonald, said.

French prepaid meal voucher and card provider Edenred touched record highs and was last up 10.2 per cent, after predicting it would beat annual growth goals this year.

In the debit column, shares in electrical components supplier Spectris tumbled more than 9 per cent, with analysts disappointed the company provided no further details on cost saving programmes.

REUTERS