European Stocks Advance Amid Earnings as Bond Selloff Pauses
European Stocks Trade Steady as Traders Weigh Flurry of Earnings
(Bloomberg) -- European stocks gained as a flurry of corporate earnings reassured investors that profits can overcome economic hurdles while U.S. Treasury yields pulled back.
The Stoxx Europe 600 climbed 0.8% by the close in London. Technology, construction and banking shares soared, while miners slumped as metals fell.
READ: Unstoppable Bond Yields Put European Tech at Risk: Taking Stock
Tech shares got a boost as ASML Holding NV jumped after signaling plans to raise its forecasts later this year as demand for its chip-making machines is outstripping supply. Danone SA soared after reporting a surge in bottled water revenue, and following a report that rival Lactalis may be interested in buying its businesses. Heineken NV climbed after sales came ahead of estimates. Just Eat Takeaway.com NV rose after saying it’s considering a partial or full sale of its Grubhub unit.
European equities have been under pressure this year as various risks from hawkish central banks to the war in Ukraine threaten to hurt the economy, with the International Monetary Fund slashing its world growth forecast on Tuesday. Investors are now looking to earnings and corporate guidance to assess whether companies can overcome rising headwinds, including surging inflation.
“Given higher inflation and slowing growth the upside potential for equities seems to be limited,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg. He doesn’t expect a sharp selloff in the near term either as positioning and sentiment are already bearish and first quarter results are not worse than expected.
Investors will be watching the TV debate between French President Emmanuel Macron and nationalist leader Marine le Pen tonight just days before the final ballot of the presidential election this weekend. From Citigroup Inc. to asset manager Amundi SA, the warnings are piling up that markets are underestimating the risk of a surprise.
Monetary policy continues to be in focus after European Central Bank Governing Council member Martins Kazaks said the regulator could raise interest rates as soon as July amid “significant” inflation risks that will probably require further tightening later in the year.
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