European shares rebound on strong earnings, takeover speculation boosts Hugo Boss

Reuters

Published Apr 21, 2021 03:27AM ET

Updated Apr 21, 2021 05:20AM ET

By Sruthi Shankar

(Reuters) -European stocks bounced back on Wednesday after their worst sell-off this year as optimism about a strong earnings season countered worries about a rapid rise in COVID-19 cases in some countries.

Tech stocks were the top gainers, up 1.3%, with semiconductor equipment maker ASML jumping 4.7% after it raised its full-year sales forecast, citing strong demand amid a global computer chip shortage.

Smaller rival ASM International (OTC:ASMIY) rose 0.6% on forecasting a rise in second-quarter orders.

German fashion house Hugo Boss jumped 7.5% to a one-year high, with traders citing a media report of takeover interest in the company, including from French luxury goods maker LVMH.

The pan-European STOXX 600 index rose 0.4% after a blistering seven-week rally ran into a bout of profit-taking on Tuesday, when it fell 1.9%.

Some analysts pointed to concerns over the strength of a global economic recovery after India's mounting coronavirus crisis and a global spike in COVID-19 cases.

"While the UK and the US may be moving towards re-opening, it's not necessarily a straight line of recovery," said Joshua Mahony, senior market analyst at IG. "What's been happening in Brazil and India highlights the fact the virus is a massive issue."

There were concerns about stretched valuations, with global equities trading at all-time highs and earnings expectations surging as vaccination drives and stimulus programmes support global recovery.

European earnings are expected to rise a record 61% in the first quarter of 2021, according to Refinitiv IBES data, placing Europe on course for a rare outperformance versus corporate America.

The world's second-largest brewer Heineken (OTC:HEINY) NV gained 3.9% after it reported better-than-expected quarterly sales, helped by increased beer sales in Africa and Asia.

French luxury goods group Kering (PA:PRTP) was up 1.4% after Gucci's revenue rebounded strongly in the first quarter.

Oil & gas stocks got a boost despite weaker oil prices, as Deutsche Bank (DE:DBKGn) started coverage of stocks including Royal Dutch Shell (LON:RDSa) and France's Total with a "buy" rating.