Europe open: Shares bounce back from heavy losses with focus on corporate news
European equity markets rose in early trade, bouncing back from heavy losses in the previous session on the back of a selloff in Chinese equities.
At 0900 BST, the benchmark Stoxx Europe 600 index and Germany’s DAX were both 0.5% higher, while France’s CAC 40 was up 0.4%.
“Investors are enjoying some light reprieve from the selloff this morning, but while markets remain volatile many will remain firmly on the sidelines,” said Mike McCudden, head of derivatives at stockbroker Interactive Investor. “Furthermore, investor caution ahead of the Fed meeting may usher in a dead cat bounce for equities over the next few sessions.”
“However, longer term investors will be keeping an eye on the recent increase M&A activity as a reason to pick up a few bargains. With the Pharmaceutical sector still hot and today, following some heavy trading against the trend over recent sessions, is comes as no great surprise that RSA Insurance is being approached.”
Shares in RSA Insurance rocketed after Zurich Insurance confirmed that it was considering a bid for the company. Stock in Zurich Insurance was trading down, however.
ITV was also on the front foot after it lifted its interim dividend by 36% and said group earnings before interest, tax, depreciation and amortisation rose 24% to £400m.
Clothing retailer Next gained after raising its sales and profit guidance for the year as warmer weather at the end of the season boosted second-quarter sales.
Elsewhere, French drugmaker Sanofi said it had entered into a research agreement with Regeneron Pharmaceuticals and will invest $2.17n to develop new cancer treatments together.
French telecom operator Orange pushed higher after the company’s sales and core earnings beat analysts’ expectations.
On the downside, French tire maker Michelin fell sharply after its first-half operating profit and earnings per share came in lower than expected, while Norway’s Statoil slipped into the red after it posted a 16% drop in second-quarter net profit.
The Federal Reserve Open Market Committee’s two-day meeting gets underway on Tuesday, with a rate announcement due on Wednesday. No change in rates is expected until at least September but investors will be eyeing any further clues on the possible timing of a move.
There are no major Eurozone data releases due, but in the US, S&P Case-Shiller house prices are at 1400 BST and consumer confidence is at 1500 BST.