European shares ended higher on Thursday supported by positive earnings, especially reports from Deutsche Bank and Barclays that eased concerns about the banking sector’s health, while Denmark’s SimCorp surged on a deal with Deutsche Boerse.
The pan-European STOXX 600 index was up 0.2%, gaining for the first time in three sessions.
SimCorp jumped 38.3% to the top of the index, after stock exchange operator Deutsche Boerse announced a 3.9 billion euro ($4.31 billion) takeover offer of the software firm. Deutsche Boerse shares fell 7.7%.
Apart from dealmaking, investors gauged a raft of earnings reports.
Barclays Plc rose 5.3% on an estimate-beating quarterly profit, as a resilient performance from its consumer bank offset pressure on other key business lines.
Deutsche Bank AG gained 2.5% following a better-than-expected rise in first-quarter profit, as income from higher interest rates offset a slump in revenues at the investment bank.
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The broader banking index added 1.1%, while the industrial goods sector gained 1.3% after Swedish engineering firm Atlas Copco jumped 14.4% on posting record orders and a quarterly revenue beat.
Unilever Plc climbed 1.4% on better-than-expected quarterly underlying sales, as the Dove soap maker raised prices yet again to compensate for higher commodity and supply chain costs.
“European equities have seen earnings estimates reduced throughout the year, and this should set the bar to a beatable level,” said Patrick Armstrong, chief investment officer at Plurimi Wealth.
“We expect revenues will generally beat throughout this reporting season, and earnings estimates to be met. Margins may prove difficult to defend going forward, but it seems most companies have had a good record at passing rising prices on to consumers.”
The STOXX 600 tracked gains of 1.4% this month, as corporate reports so far proved less dire than expected following a chaotic month driven by banking sector stresses in March. But uncertainty over interest rate hikes remain.
Markets now await first-quarter euro zone GDP data due on Friday, expected to show how elevated energy prices and tighter banking standards have impacted the economy, ahead of the European Central Bank’s May 4 policy meeting.
Media shares dropped 1.7%, leading sectoral declines, as Universal Music Group fell 6.6% after worse-than-expected growth in subscription streaming overshadowed a revenue beat.
STMicroelectronics NV lost 8.3% on worries that a slowdown in the semi-conductor industry would eventually catch up with the company.