Technology and auto companies led European equities toward a four-week high amid encouraging earnings announcements.
Software maker SAP SE climbed 4.4 percent after reporting second-quarter results thatbeat analyst projections. ASML Holding NV advanced 3.4 percent after Europe’s largest semiconductor-equipment maker said sales increased. Volkswagen AG surged 5.9 percent after saying first-half earnings exceeded estimates. Anglo American Plc dragged miners lower, falling 6.4 percent, after cutting its copper production target.
The Stoxx Europe 600 Index added 1 percent at 10:25 a.m. in London, with the volume of shares changing hands 37 percent lower than the 30-day average. The gauge has alternated between gains and losses each day since last week, after a rebound of about 9 percent following the post-Brexit vote slump.
“There are some positive surprises like SAP pushing stocks upwards,” said Ralf Zimmermann, an equity strategist at Bankhaus Lampe in Dusseldorf, Germany. “But overall, I do not expect the earnings season to be strong enough to really trigger a lasting rally in stock markets. Expectations are too high, and there will be ongoing downwards revisions of longer-term growth expectations.”
The International Monetary Fund lowered its forecast for a pickup in global growth on Tuesday, citing Britain’s decision to leave the European Union. It now sees the economy expanding 3.1 percent this year, down from April’s 3.2 percent projection. And while the earnings season is having some positive surprises, analysts forecast that profits at Stoxx 600 companies will slide 4.3 percent this year.
Investors watching corporate earnings results are also waiting for Thursday’s European Central Bank meeting for clues about President Mario Draghi’s plans. While economists surveyed by Bloomberg predicted policy will remain unchanged, they forecast fresh measures will be announced before the end of the year.
France’s CAC 40 Index and Germany’s DAX Index rose the most in western Europe on Wednesday, up more than 1.1 percent. With the DAX’s valuation near a record low relative to the Stoxx 600 and optimism about earnings growth in Germany, investors havegone back to the market. The biggest exchange-traded fund following the shares just had three consecutive weeks of inflows for the first time since January.
Among other companies moving on corporate news, Nordea Bank AB added 2 percent as its operating income rose. Lonza Group AG jumped 6.6 percent as the Swiss developer of drug ingredients raised its annual guidance. Finnish industrial-engine maker Wartsila Oyj lost 4.4 percent after posting operating profit that missed projections. Man Group Plc fell 4 percent as Chief Executive Officer Emmanuel Roman is leaving for Pacific Investment Management Co.