Muted Gains In European Indexes Amid Mixed Earnings Reports

Bridgette Randall
24 Apr, 2024
Frankfurt

Stocks in European financial markets bounced higher, but gains were limited as investors debated the future rate path and level as corporate results rolled in. 

Benchmark indexes in Frankfurt, Paris, and London edged higher, and bond yields advanced after comments from Bundesbank president Joachim Nagle. 

The European Central Bank may not follow up with a series of rate cuts after the June rate cut, Nagle said at an industry conference in Berlin. 

Investors are anticipating the ECB to lower its rate cut in June amid a weakening of inflation in the last ten months, but core inflation is still above the central bank's target rate of 2%. 

Investors also reviewed the latest update on German business morale index released by the Ifo Institute. 

The business confidence index increased to 89.4 in April from 87.8 in March and advanced to the highest level since May 2023. 

Business morale is still weak but recovering in the hopes that the European Central Bank will lower the interest rate in June. 

 

Europe Indexes and Yields

The DAX index increased by 0.3% to 18,194.82; the CAC-40 index rose by 0.3% to 8,126.60; and the FTSE 100 index inched higher by 0.5% to a new intraday record high of 8,084.75. 

The yield on 10-year German bonds edged up to 2.54%; French bonds inched higher to 3.04%; the UK gilts edged higher to 4.30%; and Italian bonds inched higher to 3.88%.

The euro edged higher to $1.068; the British pound inched higher to $1.242; and the U.S. dollar edged higher to 91.42 Swiss cents.

Brent crude decreased $0.34 to $88.10 a barrel, and the Dutch TTF natural gas fell by €0.10 to €28.55 per MWh.

 

Europe Stock Movers

ASM International soared 9.9% to €584.40 after the water processing equipment maker reported better-than-expected first quarter results and raised its sales outlook for the second quarter. 

Volvo AB increased 0.4% to SEK 283.70, and the Swedish automaker reported first quarter revenue below market expectations but adjusted operating profit rose sharply. 

Svenska Handelsbanken AB dropped 9.5% to SEK 123.0 after the Swedish bank reported a decline in earnings in the first quarter. 

Net income declined to SEK 6.6 billion from SEK 6.81 billion a year ago, after expenses rose faster than income in the quarter. 

Net interest income advanced to SEK 11.59 billion from SEK 11.49 billion, and the bank's common equity Tier 1 ratio, a measure of the bank's financial strength, eased to 18.8% from 19.4% a year ago. 

Roche Holding AG decreased 2.8% to CHF 223.20 after the Swiss pharmaceutical company said first-quarter sales declined 6%. 

Evotec SE plunged 37% to €8.86 after the German biotech company reported full-year results and appointed a new chief executive. 

Revenue increased 4% to €781 million from €751.4 million a year ago. 

The company registered an operating loss of €47.5 million compared to a profit of €20.85 million a year ago. 

Excluding one-time items related to restructuring, adjusted operating earnings plunged 35% to €66 million from €101.5 million. 

The biotech company said business conditions are not likely to improve until the end of 2024, and a simplified business structure is expected to improve operating earnings by €40 million on an annual basis. 

Kering SA plunged 8% to €321.85 after the parent company of Gucci projected a 40% to 50% decline in operating profit in the first half.