July 10 2024: European shares gained on Wednesday, driven by corporate earnings, though the rise was tempered by weak oil and metal prices. Investors were also focused on Federal Reserve Chair Jerome Powell’s second day of testimony for further insights on interest rates.
By 0815 GMT, the pan-European STOXX 600 had risen 0.2%, led by a more than 1% increase in real estate shares.
Gains were limited as the basic resources sector fell 0.5% due to declines in crude oil and base metal prices.
French stocks rose 0.2% after declining in the previous session, as investors evaluated the political situation following Sunday’s legislative election.
On Tuesday, Powell stated that inflation “remains above” the Fed’s 2% target but has been improving in recent months, adding that “more good data would strengthen” the case for interest rate cuts. His second day of testimony before the House Financial Services Committee is scheduled for 1000 GMT.
Markets are also anticipating June inflation data from the U.S. and Germany, due on Thursday.
In a note, Deutsche Bank analysts predicted, “we expect both earnings and sales to have increased slightly in Q2, marking the first positive y-o-y growth rate since Q1 2023.”
Norwegian aerospace and defense company Kongsberg Gruppen surged 8.1%, leading the benchmark index, after reporting strong revenue growth, improved margins, and a growing order backlog in the second quarter.
Enagas rose 3.6% after the Spanish grid operator agreed to sell its 30.2% stake in Tallgrass Energy to U.S. fund Blackstone for $1.1 billion.
Conversely, UK’s Barratt Developments dropped 2.4% as the homebuilder forecast up to a 7% fall in its home-building targets for fiscal year 2025, citing high mortgage rates and broader economic concerns.
“Higher interest rates have caused the UK housing market to stall over the last couple of years, and although mortgage demand looks to be gradually picking up, the ambitious targets set by the new government could be exactly what is required to get the market moving,” said Mark Crouch, an analyst at investment platform eToro.
Travis Perkins climbed 4.4% after the British construction materials firm appointed Pete Redfern as its new CEO, succeeding Nick Roberts, who will step down on Sept. 16 after five years in the role.
Volkswagen shares fell 2.2% after the company warned of potential closures at its Brussels site for the luxury brand Audi, due to a significant drop in demand for high-end electric cars affecting Europe’s top carmaker.