UPDATE: European shares edge up as earnings growth expectations stabilise
European shares edged up on Wednesday as optimism about Washington and Beijing trade talks lifted global markets and data showed earnings growth forecasts for Europe are stabilising after steep downward revisions.
The pan-European STOXX 600 was up 0.3 percent at 0943 GMT, with Germany’s trade-sensitive DAX up 0.2 percent.
Asian bourses and before them Wall Street also made gains as hopes grew that the United States and China will hammer out a trade agreement and avert a new round of U.S. tariffs on imports from China set to kick in by March 1.
“The situation on US-China trade remains fluid, but our Asia strategy team’s base case is that there will be a deal”, Nomura analysts said in a strategy note.
Madrid’s IBEX .IBEX was slightly lagging its peers, down 0.1 percent, amid reports that Spain’s minority Socialist government could announce an early general election if it loses a budget vote following its refusal to negotiate Catalan self-determination.
Amid the labyrinthine twists and turns of Brexit, London’s FTSE slightly outperformed, up 0.4 percent, after data showed British inflation fell to a two-year low in January.
A fresh batch of corporate earnings triggered strong price moves both upwards and downwards.
Dutch bank ABN Amro, hit by loan impairments, fell 6.3 percent with fourth-quarter net profit way below analysts.
Dutch blue chip peer Heineken had a totally different welcome from the market, rising 4.3 percent and set for its best day since 2015 on better-than-expected results.
Still in the Netherlands, paint maker Akzo Nobel jumped 3.9 percent after marginally beating expectations.
Amundi, the euro zone’s largest asset manager, was also cheered by investors, rising 4.3 percent, after confirming its profit targets for 2020 despite adverse market conditions in the fourth quarter.
Among other companies whose results stood out in morning trading was Ingenico, up 7.2, online gambling firm Kindred Group, up 5.8 percent and Swedish Match which rose 7.5 percent, the top gainer of the STOXX 600.
These positive results come in as earnings forecasts for STOXX 600 companies are stabilizing after experiencing a free fall since last November, I/B/E/S Refinitiv data shows.
Earnings for the last quarter of 2014 are now expected to rise 3 percent year-on-year, a more optimistic outlook than the 2.3 percent forecast of last week.