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European shares climb on bank earnings cheer, tech boost
Global Banking & Finance Review®
Company
By Ankika Biswas
(Reuters) -European shares rose on Friday as investors cheered earnings from French banks Societe Generale and Credit Agricole, while the technology sector got a boost from Apple’s upbeat results and a record share buyback.
The pan-European STOXX 600 index rose 0.3% by 0830 GMT. However, it was set for a weekly decline, as investors navigated the earnings season in full drive and the European Central Bank’s policy outlook beyond June.
Investors await the euro zone’s unemployment rate and the U.S. non-farms payrolls data during the day for clues on the timing of commencement of rate cuts.
“The economic environment’s picking up a bit in the euro zone, but not massively… they are going to be cutting rates more than the state, but not half as much as people thought a few months ago,” said Rupert Thompson, chief economist at Kingswood Group.
ECB policymaker Yannis Stournaras indicated three rate cuts this year as stronger-than-expected economic growth supports inflation, while chief economist Philip Lane noted the central bank should accumulate data before each cut.
Societe Generale jumped 4.6% following a lower-than-expected fall in first-quarter net income, while Credit Agricole SA climbed 3.4% after a forecast-beating 55% jump in first-quarter net profit.
Gains in the French banks pulled the country’s benchmark index 0.5% higher and the region’s banks index up 0.6%.
The technology sector gained 1.2%, boosted by Apple beating modest expectations for second-quarter results and forecast, and unveiling a record share buyback program.
Media was the top sectoral gainer, as Universal Music Group rose 1.9% after reporting a first-quarter earnings beat and signed a new deal with TikTok.
Glencore fell 1.5% after Reuters reported the commodities group is studying an approach for Anglo American, sending its shares up 3.2%.
German consumer goods company Henkel jumped 4.5% after slightly raising its 2024 guidance, while Aurubis slumped 12% after UBS downgraded the largest European refined copper producer to “sell” from “buy”.
German truck maker Daimler Truck dropped 5.4% after warning of rising headwinds in the European market, casting shadow over first-quarter profit beat.
Novo Nordisk fell for the second session, down 4.1%, as competition from rival Eli Lilly forced the Danish drugmaker to cut prices of its blockbuster obesity drug Wegovy.
Of the STOXX 600 companies to have reported earnings to date, 58.8% have exceeded estimates, compared with a long-term average of 54% as per LSEG data released on Tuesday.
(Reporting by Ankika Biswas in Bengaluru; Editing by Mrigank Dhaniwala and Varun H K)
The STOXX 600 index is a stock market index that represents 600 of the largest companies across 17 European countries, providing a broad measure of the European equity market.
A share buyback is when a company purchases its own shares from the marketplace, reducing the number of outstanding shares and often increasing the value of remaining shares.
The European Central Bank (ECB) is responsible for managing the euro and formulating monetary policy for the Eurozone, aiming to maintain price stability and support economic growth.
Economic growth refers to the increase in the production of goods and services in an economy over a period, typically measured by the rise in Gross Domestic Product (GDP).
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