By Sruthi Shankar
(Reuters) – A slew of upbeat updates from European blue-chip firms helped the region’s benchmark index rise on Wednesday and further recover from Monday’s sharp losses, while travel stocks roared back after weeks of declines.
The pan-European STOXX 600 index rose 1.4%, extending Tuesday’s small gains. Travel and leisure stocks jumped 4.2% after getting hammered recently by worries about a resurgence in virus cases.
Dutch semiconductor equipment maker rose 3.6% and neared all-time highs hit just last week after it raised its 2021 sales outlook and announced a new share buyback plan.
Shares in peers ASMI and BE Semiconductor rose about 3% each.
Swiss drugmaker Novartis added 1.8% as its second-quarter core net income beat market expectations, boosted by its key drug brands.
European companies listed on the STOXX 600 are expected to post a 115.2% jump in second-quarter profit versus a year ago, as per Refinitiv IBES data. While forecast for profit growth has consistently risen, many expect growth rate to peak in the second quarter.
However, the upbeat reports helped investors to look past worries about a cooling global growth as many parts of Asia, Europe and the United States grappled with surging cases of the Delta variant.
“The sharp rise in virus cases remains a real and present danger, particularly for those countries where vaccination levels are well below 50%,” said Michael Hewson, chief market analyst at CMC Markets.
“In the case of the likes of the U.K. and U.S. where vaccination levels are much higher, markets are banking that the vaccine wall holds back the virus enough not to overwhelm the respective healthcare systems of both countries.”
Investors expect the European Central Bank to stick to a dovish tone at its policy meeting on Thursday. Earlier this month, it had unveiled a new strategy where it will tolerate higher inflation by targeting 2% inflation.
Among decliners, German business software group SAP slid 1.9% despite raising its outlook for the second time this year.
Mercedes-Benz maker Daimler AG fell slipped 0.9% after it warned that a global shortage of semiconductor chips will dent car sales in the second half of 2021.
Graphic: STOXX 600 on pace to recover from Monday’s rout – https://fingfx.thomsonreuters.com/gfx/mkt/zdpxoyorjvx/Pasted%20image%201626855021128.png
(Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)
