European shares edge higher as earnings counter lockdown worries

The pan-European STOXX 600 rose 0.2 per cent, reversing from losses at the open. ― Reuters pic
The pan-European STOXX 600 rose 0.2 per cent, reversing from losses at the open. ― Reuters pic

LONDON, Oct 20 — European stocks inched higher today as strong earnings from Swiss bank UBS, consumer giant Reckitt Benckiser and others offset concerns from tighter coronavirus curbs across the continent and doubts over fresh US stimulus.

The pan-European STOXX 600 rose 0.2 per cent, reversing from losses at the open.

Ireland announced some of Europe’s toughest Covid-19 constraints yesterday, while Italy, Spain and Britain also imposed curbs to limit the spread of new coronavirus cases that now threaten to derail a budding economic recovery.

“What we’re likely to see is concerns about near-term growth, and I wouldn’t be surprised if we saw weakness in markets on the back of that,” said Nick Peters, multi-asset portfolio manager at Fidelity International.

“Thinking 6-12 months out, we’re assuming that local lockdowns will be successful and there should be better news about vaccine.”

Earnings were a bright spot. UBS rose 2.6 per cent as it posted a 99 per cent jump in quarterly profit, while Swedish bank Swedbank gained 0.3 per cent after it reported a bigger-than-expected rise in quarterly net profit.

Computer peripherals maker Logitech International surged 18.9 per cent after it raised its full-year forecast.

Reckitt Benckiser added 2.5 per cent after it lifted its full-year outlook as the coronavirus pandemic boosts demand for its cleaning products.

Meanwhile, European stock markets run by Euronext resumed normal trading after it was plagued by technical glitches the previous day. France’s CAC 40, one of the markets hit by the glitch, rose 0.5 per cent.

Robust demand in the United States and China helped cognac maker Remy Cointreau post a broader recovery in second-quarter sales, but its shares slipped 1.3 per cent, while those in Pernod Ricard gained 1.8 per cent.

Swedish telecoms operator Tele2 fell 6.2 per cent after it stuck to its outlook for roughly unchanged operating profit in 2020.

“The numbers themselves are relatively unimportant. What most investors are looking at it is how strong 2021 recovery will be,” said Peters.

Third-quarter profits for companies on STOXX 600 are expected to drop 36.7 per cent, according to Refinitiv data, improving from a 51 per cent plunge in the previous quarter when economic losses from the pandemic peaked. — Reuters

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