EUROPEAN shares logged their biggest daily rise in over two weeks on Thursday, boosted by financial stocks as investors weighed mixed corporate earnings, US tariffs and a potential breakthrough to end the Russian-Ukraine conflict.
The pan-European Stoxx 600 index closed up 0.92 per cent at 546.05, a one-week high. The European banks index climbed 2 per cent to its highest level since 2010 and the insurance index rose 1.6 per cent to a record high.
Financial stocks have rallied in recent weeks as investors look for areas of the market less exposed to trade uncertainty.
US President Donald Trump’s higher import duties on many trade partners took effect on Thursday. Negotiations remain underway with Switzerland, which faces a 39 per cent import levy that is likely to inflict serious damage on its export-focused economy.
Swiss stocks settled 0.8 per cent higher, with pharma companies Roche and Novartis both rising as the sector is currently spared from the higher tariffs. Also aiding the upbeat mood, the Kremlin said Vladimir Putin and Donald Trump will meet in coming days, raising expectations of a potential ceasefire in Ukraine.
The defence sector lost 2.3 per cent, with German defence firm Rheinmetall down 8 per cent after missing second-quarter sales forecasts, partly due to delayed German defence contract awards.
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“A Russia Ukraine peace deal should be positive for European consumers and risk sentiment and negative for oil prices. Sectors to benefit should be European consumers, growth sensitive and construction related sectors,” said Mohit Kumar, an economist at Jefferies.
“It should also be positive for Eastern Europe as most of the reconstruction efforts would likely flow through Eastern European economies.”
Tech stocks rallied globally on relief that companies committed to US manufacturing, like Apple, would avoid tariffs.
The European technology index was up 1.7 per cent, with chipmakers BE Semiconductor, ASML Holding and SAP all between 2.4 per cent and 4.5 per cent higher. Danish drugmakers Novo Nordisk and Zealand Pharma rose 6.7 per cent and 4.7 per cent, respectively, after US competitor Eli Lilly’s weight-loss pill data fell short of expectations.
Allianz shares gained 4.1 per cent after the financial services company posted a better-than-expected rise in second-quarter net profit, while Belgian lender KBC rose 6.3 per cent to pre-financial crisis levels after raising its annual net interest and total income forecasts.
Raiffeisen Bank International jumped 13.9 per cent after a Russian court lifted a temporary freeze on shares of its Russian subsidiary.
Telecommunication stocks were under pressure with Freenet AG and DT Telekom down 5.4 per cent and 5 per cent, respectively, after their quarterly results.
Of the 198 companies in the Stoxx 600 that had reported earnings through Tuesday, 53 per cent exceeded analysts’ estimates, according to data compiled by LSEG. In a typical quarter, 54 per cent beat forecasts. REUTERS
