The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, January 29, 2018. REUTERS/Staff/Remote
February 1, 2018
By Danilo Masoni
MILAN (Reuters) – European shares rose on Thursday following three days of losses, supported by a flurry of mostly positive results and gains by banks after the U.S. Federal Reserve flagged higher interest rates later this year.
U.S. stock futures were higher after Facebook forecast rising ad sales despite a dip in usage on the social media network.
Equities, which have rallied sharply since the start of 2018, face a major test later on Thursday when three U.S. tech giants, Apple, Google parent Alphabet and Amazon.com, all announce earnings.
Back in Europe, oil major Royal Dutch Shell fell on disappointing fourth-quarter cashflow and insulin maker Novo Nordisk declined after its chairman quit and it reported operating profit below expectations.
But several other big companies, from Nokia to Roche, Unilever and Dassault Systemes, were up after their profit updates, helping the pan-European STOXX 600 benchmark index rise 0.7 percent by 0852 GMT.
The UK’s FTSE edged up 0.2 percent while Germany’s DAX rose 0.6 percent.
On Wednesday, the U.S. Federal Reserve flagged interest policy tightening later this year and upgraded its inflation outlook at its policy meeting, its first in 2018 and last to be chaired by Janet Yellen.
“While last night’s final FOMC meeting of Fed chief Yellen turned out to be a touch more hawkish than expected, at the same time it delivered what markets like, namely certainty that the Fed is highly likely to raise rates in March,” said Markus Huber, trader at City of London Markets.
“In light of today’s flood of earnings in Europe and the US, the FOMC meeting will most likely have only a limited and temporary impact on markets,” he added.
Most European sectors were trading in positive territory with tech stocks and banks among the leading gainers, both up around 1 percent, while healthcare stocks were weighed down by a 4 percent drop in Novo.
There was little cheer for Danish telecoms operator TDC’s decision to buy Swedish Modern Times Group’s broadcasting and entertainment business in a $2.48 billion deal. TDC slumped 11 percent, the biggest faller on the Stoxx 600 index, while Modern Times gains 2 percent.
Still in earnings, NEX Group rose 8.4 percent to the top of the STOXX after revenues rose. The financial technology firm benefited from markets it said were ‘noticeably’ more active this year.
Bic fell 8 percent as Natixis cut its price target on the stock following its earnings update.
Overall fourth-quarter earnings for the STOXX 600 are expected to increase by 11.9 percent year on year, the latest Thomson Reuters data showed.
(Reporting by Danilo Masoni; Editing by Tom Pfeiffer and Raissa Kasolowsky)
