AMSTERDAM/LONDON: European stocks rose on Wednesday as commodity-linked stocks recovered from sharp falls in the previous session, while lower bond yields kept supporting highly valued technology shares. The pan-European STOXX 600 rose 0.8%, a day after the index snapped a three-day winning streak as worries about the global economy led to a bond market rally that pushed US and euro zone bond yields lower.
Yields slid again on Wednesday, lifting technology stocks by 1%, but pushing bank stocks down 0.2%.
Barclays in a note said they were adding tech exposure via software “given their later-cycle investment nature. Valuations are not cheap, but we expect earnings to be supportive.”
Europe’s most valuable tech company SAP was the biggest boost to the STOXX 600, up 3.5%. Traders also pointed to a double upgrade to “buy” from Bank of America. Germany’s DAX posted its best session in seven weeks, up 1.2%.
As copper and iron ore prices rose, mining stocks made back 2.3% from Tuesday’s 2.5% drop. Among other notable moves, French state-controlled power group EDF added 2% after raising its 2021 core earnings target, given its new estimate for nuclear output in France.
With earnings season set to kick off later in July, analysts are expecting profits at STOXX 600 companies to jump 108.6% in the second-quarter versus a year ago, as per Refinitiv IBES data.
Swiss duty-free retailer Dufry fell after Italy’s Autogrill denied rumours of a potential tie-up between the companies. Both slipped more than 1.5%. Dufry was up 1.3% after gaining as much as 5% earlier, while Autogrill shares were up 1.5%.
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