LONDON
European shares rose modestly on Tuesday, recovering further ground as geopolitical tensions eased in holiday-thinned trading, though falls among commodity-related stocks capped gains.
The pan-European STOXX 600 index was up 0.1 per cent, weighed by a drop in the basic resources and energy sectors after oil prices gave up earlier gains.
European blue chips gained 0.3 per cent, however, as did Britain’s FTSE 100, while Germany’s DAX ticked 0.2 per cent higher. Italian and Austrian markets were closed for a holiday.
Health stocks and financials were the biggest contributors to gains, with banks trading roughly flat. The sector was hit particularly hard in the latter part of last week as tensions rose between the United States and North Korea.
Danone led the food and beverage index higher, up 1.6 per cent after a media report that the activist fund Corvex Management owned a stake in the French yoghurt maker.
Insurer and asset manager Standard Life Aberdeen was among the biggest gainers, rising more than 2 per cent following a supportive note from broker Barclays, which raised its rating on the firm to “overweight”, citing synergies from its acquisition of Aberdeen Asset Management.
“Deal synergies at £200m appear attractive and there is evidence to suggest that previous headwinds of outflows at GARS and global emerging markets (GEM) at Aberdeen are receding,” analysts at Barclays said in a note, referring to Standard Life’s flagship Global Absolute Return Strategies Fund (GARS).
Elsewhere, Norwegian consumer publishing firm Schibsted was the biggest faller, dropping 6.4 per cent after Facebook announced new marketplace services, while retailer Next’s shares fell 3.7 per cent after Berenberg cut its rating on the stock to “sell” from “hold”.
Earnings also spurred some moves, with fund supermarket Hargreaves Lansdown falling 2.1 per cent after reporting its full-year results.
German potash miner K+S fell 5 per cent after saying that it was unlikely to reach its 2020 earnings EBITDA target, blaming a slow recovery of potash prices.
Analysts at UBS said that while K+S’ second-quarter results were broadly in-line on depressed levels, the guidance was “uninspiring”.
The European second-quarter earnings season is rolling to a close with 82 per cent of MSCI Europe firms having already reported earnings, according to Thomson Reuters data.
More than 60 per cent have either met or beaten analysts’ expectations.
“It’s been a robust earnings season, however it hasn’t been one that we feel justifies the high valuation of some of the European equity indices now,” Jonathan Roy, advisory investment manager at Charles Hanover Investments, said, adding that for this reason trading is starting to be subdued in some of the indexes, such as Germany’s DAX.
