Europe midday: Equities push higher as investors cheer corporate news
European equity markets rose on Wednesday as investors cheered a raft of solid corporate results.
At midday, the benchmark Stoxx 600 index was up 0.8%, while France’s CAC 40 and Germany’s DAX were both up around 1.2%.
It was a very different story in Greece, however, where the Athex Composite slumped 3.2% as banks fell heavily, almost reaching the 30% loss level at which trading is halted.
“European equities are trading higher this morning as a very respectable European earnings season and improving growth prospects for the Eurozone, especially for countries like Italy and Spain are providing investors with plenty of reasons to favour European stocks versus Asian and US ones,” said Markus Huber, senior analyst at Peregrine & Black.
French bank Societe Generale surged after it reported a 25% increase in second-quarter profit and said it plans to target further cost reductions in the coming years.
London-listed insurer Legal & General rallied after posting a 6% rise in first-half pre-tax profit and an 18% increase in operating profit thanks to strong organic growth in the UK and US, as it raised its interim dividend despite a fall in annuities.
Ryanair was on the front foot after the budget carrier said it was the first ever airline to carry over 10m passengers in one calendar month. It said traffic grew 11% to 10.1m customers in July from 9.15m in July last year, while the load factor, which measure how many seats were actually taken up per flight, was up 4% to 95%.
London Stock Exchange was also in positive territory after it said first-half revenues nearly doubled thanks to the contribution of December acquisition Russell Investments, with underlying growth of a more modest 9% on the back of an encouraging performance of markets and data.
Standard Chartered edged higher after its final results, as analysts welcomed the bank’s decision to cut its dividend and preserve capital.
Mediobanca gained after the Italian investment bank posted a 79% rise in fourth-quarter net profit on higher interest income and rising fees.
German consumer goods company Beiersdorf rose as it reported a 19% increase in second-quarter net profit amid rising sales.
On the downside, Dutch lender ING slipped into the red as its second-quarter results fell short of analysts’ expectations.
On the data front, Eurozone retail sales fell more than expected in June, with Germany doing most of the damage, according to figures released by Eurostat.
Sales in the 19 countries that use the euro fell by 0.6% in June from May, which was a steeper decline than the 0.2% drop expected by analysts. On the year, however, sales were up 1.2%.
The largest drop was seen in Germany, where sales fell 2.3%.
Data released by Markit showed economic expansion in the Eurozone eased in July as growth in France and Italy slowed, although the figures beat expectations.
The final Eurozone composite output Index came in at 53.9, above the flash estimate of 53.7 and better than the 53.9 reading expected, but below June’s 54.2.
Still to come, the US ADP employment report is at due at 1315 BST, while trade balance figures are at 1330 BST and ISM non-manufacturing comes out at 1500 BST.
“All eyes will be on the US ADP employment change data especially after Fed’s Lockhart in an interview to the WSJ pretty much confirmed that despite a batch of mediocre economic data of late and low wage growth the Fed is ready to raise rates already in September,” said Huber.