- Spain, Italy equity indexes rally with gains in lenders
- Germany's DAX declines as ThyssenKrupp falls on contract news
European equities rose for the first time in four days, boosted by earnings results.
Standard Chartered Plc jumped 9.8 percent to a four-month high, after reporting a surprise decline in loan impairments. BP Plc advanced 4.3 percent after unexpectedly posting a profit, despite falling oil prices. Swedbank AB rose 3 percent as net income beat analyst estimates.
Banks led gains in the Stoxx Europe 600 Index, which advanced 0.2 percent at the close of trading and as much as 0.7 percent earlier, after its first three-day drop in a month. Despite a rally since the February low, investors have kept withdrawing money from the region’s equity funds on skepticism about central-bank stimulus amid analyst cuts in earnings projections. They’re now waiting for policy decisions from the Federal Reserve and Bank of Japan this week.
“Earnings are doing pretty well,” says Michael Woischneck, a fund manager who oversees the equivalent of $190 million at Lampe Asset Management in Dusseldorf, Germany. “But that’s something that could change with just one word from a Fed governor. Although no changes are expected, wording at this week’s meeting is key.”
The benchmark gauge for European equities rebounded 16 percent from its February low through a high last week on bets that the rout in the first quarter was overdone. At the same time, analysts turned increasingly pessimistic about profit growth, and they’re now projecting earnings at Stoxx 600 companies will fall 2.2 percent this year. Investors have pulled money from the region’s stock funds for 11 straight weeks, the longest streak since May 2010, according to a Bank of America Corp. report on April 21.
Shares in Italy and Spain, among the most hit at the beginning of 2016, were the biggest gainers in western Europe on Tuesday. Banca Monte dei Paschi di Siena SpA, UniCredit SpA and Banco Bilbao Vizcaya Argentaria SA climbed more than 5 percent. With a 2.3 percent increase, Deutsche Bank AG advanced the most in Germany’s DAX Index. Stoxx 600 lenders rallied to their highest prices in more than a month.
Among other shares moving on corporate news, Volkswagen AG advanced 1.6 percent as deliveries rose in the first quarter, taking over Toyota Motor Corp.’s lead for global sales. ThyssenKrupp AG fell 2.5 percent, the most in the DAX, as France won a A$50 billion ($39 billion) contract to build Australian submarines, beating a bid from the German company.
Aircraft-parts maker Cobham Plc tumbled 17 percent after cutting its annual earnings forecast and announcing a rights issue. Chipmaker Ams AG sank 16 percent after reporting a sales slide. Air Liquide SA fell 4.8 percent after posting revenue that missed projections.