European shares led higher by mining stocks
The pan-European STOXX 600 closed up 0.8% at 611.42 points, recovering from a 1% decline on Tuesday
European shares closed higher on Wednesday, led by gains in mining stocks, though caution lingered as investors weighed the economic impact of elevated oil prices driven by the Iran war.
The pan-European STOXX 600 closed up 0.8% at 611.42 points, recovering from a 1% decline on Tuesday.
The basic resources index climbed 4.4% to a record high, tracking higher base metal prices and leading sectoral advances. It is Europe’s best-performing sector this year.
With first-quarter earnings season drawing to a close, corporate profits are expected to grow at their fastest pace in three years. European earnings are forecast to have risen 10.2% in the quarter, according to LSEG-compiled data.
Earlier in the session, German drugmaker Merck lifted its full-year adjusted operating profit forecast, sending its shares up 7.2%.
Allianz gained 1% after the insurance company posted a 52% jump in first-quarter net profit, while ABN Amro advanced 8.6% after beating quarterly profit estimates, marking its biggest daily gain since February last year.
When you look at earnings growth for the whole year that would be quite an improvement from the past years, so we’re a bit cautious on that to see if that will be realised, said Joost van Leenders, senior investment strategist at Van Lanschot Kempen.
Despite Wednesday’s gains, the STOXX index has underperformed Asian peers due to Europe’s lower exposure to AI hardware stocks.
The STOXX 600 is up 4.7% this quarter, compared with a 13.8% rise in the S&P 500 and rallies of around 30% and 55% in benchmark indexes in Taiwan and South Korea, respectively.
European semiconductor stocks Infineon Technologies, STMicroelectronics and Aixtron each gained around 10% on Wednesday.
Europe has not had the type of rally that some of the Asian countries and the U.S. have had, and it’s not out of the question for global investors to look at European shares and say, there’s a relative value trade here, said Steve Sosnick, chief market analyst at Interactive Brokers.