Earnings optimism pushes European stocks to two-week highs

Investors expected a steady recovery from the pandemic downturn to support corporate profits despite signs of inflation, so European equities hit highs for more than two weeks on Thursday.

The Pan-Europe STOXX 600 index rose 0.8%, miners rose 2.1% and tech stocks rose on the second day.

European semiconductor companies, including ASML, AMS and BE Semiconductor, top profits in the sector after Taiwan’s chip giant TSMC saw a 13.8% increase in third-quarter profits against the backdrop of surge in demand for semiconductors. rice field.

Discussions continued on the temporary nature of inflation as China’s factory gate inflation rose in September and hit a record high with soaring commodity prices.

Investors are currently waiting for US producer price data later in the day, and measurements are expected to indicate a surge in prices.

Inflation rates that central banks raise interest rates faster when policymakers plan a gradual withdrawal from pandemic stimuli due to supply chain disruptions, the global energy crisis and labor shortages There is growing concern about the rise.

David Page, Head of Macro Research at AXA Investment Managers, said:

“Rising inflation increases the amount of time we think of it, and also increases some of the risks that it could be more persistent. But so far, there are no signs that it is the case.”

Despite prolonged inflation concerns, optimism around the earnings season has eased recent stock market volatility, falling below the STOXX 600’s all-time high by about 3%.

Analysts expect third-quarter profits for STOXX 600 companies to increase 46.7% from a year ago, according to Refinitiv IBES data, after raising forecasts for a earnings season where energy companies are enjoying the biggest corrections doing.

Among individual equities, French ad group Publicis raised its outlook for 2021 after a global shift to digital media and e-commence raised its 2021 outlook as third-quarter organic growth exceeded market expectations 3.5 % Increased. UK rival WPP rose 0.6%.

Dutch navigation and digital mapping company TomTom rose 0.5% after making a sharp loss early in the session, warning that supply chain problems in the automotive sector could continue into the first half of next year.

German software company SAP was the biggest booster in the tech sector, rising 1% after recording a surge of nearly 4% in the previous session following a strong quarterly report.

By Sruthi Shankar