Brexit, trade progress drive European stocks up after tech rout
Reuters
Published Nov 13, 2018 12:24PM ET
Brexit, trade progress drive European stocks up after tech rout
By Julien Ponthus and Helen Reid
LONDON (Reuters) - European shares recovered on Tuesday as hopes for an easing of the Sino-U.S. trade war and an imminent Brexit deal chased away the previous session's fears of a peak in tech stocks.
The pan-European STOXX 600 (STOXX) rose 0.7 percent in a broad-based recovery with Germany's DAX (GDAXI) up 1.3 percent as investors turned to some strong results and tech stocks recovered.
A report that China's top trade negotiator was preparing to visit the United States ahead of a meeting between the leaders of the world's two largest economies buoyed sentiment on trade.
Europe's tech sector (SX8P) jumped 1.7 percent, having tumbled sharply in the previous session when Wall Street's tech stocks sank on fears that sales of Apple's iPhone have peaked.
Bank of America (NYSE:BAC) Merrill Lynch's monthly fund manager survey found the leading U.S. and Asian tech stocks, known by their FAANG and BAT (LON:BATS) acronyms, are still considered the most crowded trade globally.
The fast-growing tech sector has seen strong returns and been overwhelmingly popular with investors over the last few years.
On Tuesday nerves about a messy Brexit were alleviated by signs a divorce agreement between Britain and the European Union was imminent, sending sterling to a seven-month high against the euro.
The currency weighed on the exporter-heavy FTSE 100 which ended flat on the day.
The telecoms sector (SXKP) was the main gainer, up 2.3 percent, as Vodafone (L:VOD) shares jumped 7.8 percent after the world's second largest mobile operator pledged to cut costs and seek to maximize the value of its masts and towers.
Medical device development and healthcare service provider BTG (L:BTG) jumped 10.7 percent after announcing better-than-expected revenues and a positive outlook.
Bayer (DE:BAYGn) shares opened higher but finished 2.9 percent lower at the bottom of the DAX as investors focused on the German pharmaceutical group's more cautious outlook.
Bayer said forecasts for Consumer Health and Animal Health are now becoming increasingly ambitious, Northern Trust (NASDAQ:NTRS) analysts pointed out, and the two segments account for roughly 30 percent of revenues.
Some stocks suffered after earnings, though.
Ambu (CO:AMBUb), a Danish producer of single-use medical devices, was the biggest faller, down 14 percent after its results showed lower-than-expected sales of endoscopes.
Swedish snuff and cigar maker Swedish Match (ST:SWMA) fell 7.4 percent with traders citing reports that the FDA is planning regulation actions on flavoured cigars.
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Overall third-quarter earnings are expected to increase 14.6 percent from the same period last year - or 10 percent excluding the energy sector.
Companies have beaten revenue estimates more than average, while the rate of earnings beats has been lower than usual, one sign of building margin pressure.
Written By: Reuters
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