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European stocks rose modestly on Wednesday, underpinned by gains for retail stocks such as Kering, while Deutsche Bank and Barclays were also in focus following results.
The Stoxx Europe 600
SXXP,
rose 0.5% to 461.3, with the biggest gainers including Prosus
PRX,
The Dutch-based technology investor’s shares climbed 7% after three days of selling linked to its investment in Tencent Holdings
700,
The Chinese tech conglomerate’s shares rose on Wednesday after days of selling linked to a regulatory crackdown by the government.
Another big gainer was Kering
KER,
whose shares climbed 3% as the luxury goods group reported forecast-beating first-half revenue, and sales that speeded up in the second quarter as its key Gucci brand returned to pre-pandemic momentum.
Of the major regional indexes, the German DAX
DAX,
gained 0.2%, the French CAC 40
PX1,
increased 0.9% and the U.K. FTSE 100
UKX,
increased 0.2%.
U.S. stocks
DJIA,
COMP,
traded mostly higher ahead of a Federal Open Market Committee meeting outcome, as investors also weighed up earnings from Apple
AAPL,
Microsoft
MSFT,
and Alphabet
GOOGL,
alongside others including Boeing
BA,
and McDonald’s
MCD,
The biggest Stoxx 600 gainer was St. James’s Place
STJ,
which rose 7% as the wealth-managemeent group said it swung to a pretax profit in the first half of the year, and said it expects gross inflow growth in the second half to be around 20%.
The biggest faller was Idorsia
IDIA,
which fell 9%. The Swiss-based biopharmaceutical announced a CHF600 million ($655 million) convertible bond offering to support commercial product launches in key markets in 2022 and help develop its late-stage drug pipeline.
That came a day after the group’s results, which analysts at Citigroup said were largely uneventful given the drug-approval pipeline. Idorsia shares will likely remain rangebound “until we see more clinical data in Q4, and the daridorexant [insomnia drug] launch through 2022,” said a team of analysts led by Peter Verdult.
Elsewhere, investors got results from Deutsche Bank
DB,
DBK,
which beat second-quarter expectations for after-tax profit thanks to higher profit and lower provisions. Revenue at the investment fell amid a normalization of market conditions as booming client activity during the pandemic slowed down. Deutsche Bank shares fell 0.8%.
“A good set of results but we expect sustainability will come into question, especially as the FY21 revenue guidance is unchanged and the loan loss reversals are likely to prove temporary in nature,” said a team of Citi analysts led by Andrew Coombs, in a note to clients.
Barclays
BARC,
BCS,
reported a sharp rise in second-quarter pretax profit, beating forecasts and pre-pandemic levels, lifted in part by credit impairment releases, and said it would launch more share buybacks after resuming dividends. Shares climbed over 2%.
“Understandably the reliance upon their investment banking division does highlight why we are likely to continue seeing underperformance for the U.K. banks compared with their U.S. counterparts. However, with the government mitigating much of the economic fallout of the pandemic, and spending likely to gradually increase, banking stocks remain a strong pro-cyclical pick going forward,” said Joshua Mahony, senior market analyst at IG, in a note.
