European shares hit highest in six weeks on tech, retail

The pan-European Stoxx 600 index climbed 1.1% boosted by technology shares that gained 2.6% as SAP reported a 24% rise in first-quarter cloud revenue to €3.93 billion

European shares logged their best day in six weeks on Tuesday, driven by the retail and technology sector as investors found comfort in upbeat corporate updates, while the UK’s FTSE 100 index reached its all-time high.

The pan-European Stoxx 600 index climbed 1.1% boosted by technology shares that gained 2.6% as SAP reported a 24% rise in first-quarter cloud revenue to €3.93 billion, buoyed by demand for its enterprise resource planning software.

Shares of the German company jumped 5.3%.

Italian stocks were the best performers among European peers and Britain’s FTSE 100 ended at a record high for a second day, helped by a weaker pound and positive corporate updates.

This is a momentous occasion for the UK index, but the outperformance has been building for the past month. As market volatility has increased, the FTSE 100’s defensive qualities have boosted its attractiveness, according to Kathleen Brooks, research director at XTB.

Adding to the gains on the benchmark index, retail sector jumped 2.2%, with Hennes & Mauritz increasing 4.2% as Morgan Stanley raised the target price on the stock.

JD Sports Fashion increased 3.8% after Britain’s biggest sportswear retailer proposed to buy American athletic fashion retailer Hibbett Inc for around $1.08 billion.

Associated British Foods also advanced 9.0% after the Primark owner forecast “significant growth” in full-year profit.

On the flip side, Randstad, the world’s biggest employment agency, reported disappointing quarterly core earnings, sending shares of the Dutch company down 7.2%, among top decliners on the Stoxx.

Equities have been making a steady recovery from more than a month’s low as concerns of a wider Middle East conflict waned, companies are reporting positive earning updates and hopes of imminent interest rates rose.

Overall, first-quarter earnings are expected to drop 12.1% from a year ago, LSEG data showed last week.

Among other movers, Novartis was 1.8% higher as the Swiss drugmaker raised its full-year outlook after reporting first-quarter results that surpassed expectations.

Telecom Italia advanced around 2% after CEO Pietro Labriola appeared set to secure a second term as leading investor Vivendi decided to abstain in a shareholder vote on the renewal of the former phone monopoly’s board.