© Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, January 22, 2024. REUTERS/Staff
By Shristi Achar A
(Reuters) – European shares moved higher on Wednesday, boosted by technology stocks after software firm SAP and chip-making equipment maker ASML Holding (AS:) posted strong earnings, while fresh stimulus from China’s central bank further aided sentiment.
The pan-European index was up 0.8%, as of 0930 GMT, hitting an over one-week high.
Investors eyed the earnings that rolled in, with Dutch company ASML Holding up 6.1% on beating fourth-quarter earnings estimate and posting its best quarterly orders.
Amsterdam’s , housing the semiconductor equipment firm gained 1.5%, to hit an over two-year high and outperformed the region’s bourses.
Shares of SAP added 6.3%, touching a record high, after the German software firm’s 2023 operating profit beat analysts consensus and announced a restructuring plan for 2024 that will affect 8,000 roles, in a push towards AI.
Both the stocks led gains on the benchmark index, lifting the technology sector up 3.3% to its highest level in over two years.
Fourth-quarter earnings are expected to decrease 8.8% for STOXX 600 firms year-on-year, LSEG data showed, while revenues are estimated to drop around 4.5%.
“So far, we are seeing decent earnings reports in Europe, in the context of a fairly challenging macro environment,” said Richard Flax, chief investment officer at Moneyfarm.
“It gives investors a chance to focus a bit more on company fundamentals and the general corporate environment.”
Lifting risk appetite further, China’s central bank said it will cut the amount of cash that banks must hold as reserves from Feb. 5, as policymakers extend efforts to shore up a fragile economic recovery.
Shares of China-exposed luxury firms including LVMH, Kering (EPA:) and Richemont were up between 1.3% and 1.8%, while base and precious metal miners added 2.0%.
Meanwhile, a survey showed the downturn in euro zone business activity eased in January, but an improvement in the manufacturing outlook was partly offset by a steeper decline in the bloc’s dominant services industry.
The data comes ahead of the European Central Bank’s verdict on Jan. 25, where it is widely expected to hold interest rates at current levels.
Investors would, however, focus on any clues regarding the timing of interest rate cuts, with money markets pricing in around 130 basis points of cuts this year.
Among other major movers, Siemens Energy jumped 8.1% after the German energy group’s preliminary first-quarter results came in better than market expectations. The stock was the top gainer on the German 40 index, with the index gaining 0.9%.
