Industrials boost STOXX 600 as earnings season rolls in

By Ozan Ergenay, Johann M Cherian and Ankika Biswas

(Reuters) -European shares rose on Thursday, boosted by industrials after Swiss engineering company ABB touched a record high following upbeat results, while Germany-listed Sartorius had its biggest one-day drop in 17 months after bleak quarterly orders.

The continent-wide STOXX 600 closed 0.3% higher, as the earnings season picked up steam.

ABB jumped 6.3% after reporting better-than-expected first-quarter profit and signalling faster growth in coming months, lifting the industrial goods and services sector 0.7%.

Telecommunications climbed 1%, boosted by a 6.7% jump in Sweden’s Tele2 following first-quarter service revenues and earnings beat.

Banks also jumped 1.9%, led by a 5.3% advance in Bankinter after it sounded an optimistic tone on the future evolution of lending income following a robust first-quarter. Millennium bcp rose 6% as the Portuguese bank will resume dividend payments after a one-year hiatus.

On the flip side, Sartorius slumped 15.9% after the lab supplies maker’s first-quarter figures missed expectations for order intake and revenue. The company’s France-listed shares dropped 15.7%.

As markets gear up for a flurry of corporate reports in the weeks to follow, first-quarter earnings are expected to decrease 12.1% year-on-year, LSEG data showed on Tuesday.

Meanwhile, the European Central Bank made it clear that a June interest rate cut is coming but policymakers continued to differ on moves thereafter or how low interest rates can go before once again starting to stimulate the economy.

“The fact that the ECB seems to have distanced itself from the Federal Reserve concerning monetary policy could also offer some support for European equities,” said Daniela Hathorn, senior market analyst at Capital.com.

Hathorn highlighted the euro zone CPI being close to a 2% target has also helped markets adopt the idea of lower rates in Europe, which will aid struggling economic growth.

The benchmark STOXX is more than 2% away from a record closing high hit in March, as traders price in uncertainties around geopolitical tensions, impact of record high EU interest rates on corporate performances and the timing of U.S. rate cuts.

Among other stocks, Forvia rose 7.9% after the European automotive supplier’s first-quarter organic sales growth topped expectations.

Software group Planisware jumped 25.6% in a strong market debut in Paris.

EQT dropped 5.9% after the Swedish investment company reported lower than expected first-quarter results and said it expects fundraising to continue at least through 2024.

The technology sector fell 0.8%, as chip equipment maker ASML continued its decline, down 1.4%, following Wednesday’s new bookings miss.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru and Ozan Ergenay in Gdansk; Editing by Sherry Jacob-Phillips, Sonia Cheema and Jane Merriman)