FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 21, 2019. REUTERS/Staff
October 24, 2019
By Lisa Pauline Mattackal and Agamoni Ghosh
(Reuters) – European shares gained on Thursday as upbeat results from German companies offset a dour profit forecast from Nokia and a mixed bag of business sentiment indicators ahead of the European Central Bank’s October policy meeting.
The pan-European stock index <.STOXX> rose 0.3% by 0815 GMT, on track to reach its highest level this month with German stocks <.GDAXI> driven by robust earnings from Daimler and a confirmation from chemicals giant BASF of its annual outlook.
“Companies like BASF and Daimler which had reduced earnings earlier this year today said they aren’t cutting their outlook any further,” said Chris Bailey, European strategist at brokerage Raymond James.
“Even though that is not brilliant what you want to see as an investor is an end to the downgrades.”
Daimler <DAIGn.DE> jumped 4.7% after higher sales of its Mercedes-Benz cars boosted operating profit for the third-quarter, helping the sub-index of auto stocks <.SXAP> reach its highest since early May.
BMW <BMWG.DE> and PSA Group <PEUP.PA> both gained over 1%, lifting some of the gloom surrounding the sector after last week’s poor results from Renault <RENA.PA> and Volvo <VOLVb.ST>.
Healthcare stocks <.SXDP> were also higher after AstraZeneca <AZN.L> gained 3.2% on a strong set of numbers that spurred another hike in its product sales forecast.
European markets entered the third quarter earnings season this month in nervous form, with signs that Germany was heading into recession weighing on expectations for growth across the region.
ECB chief Mario Draghi holds his last meeting on Thursday after eight years at the helm with monetary policy appearing to have reached its limits for the euro area. His successor Christine Lagarde is expected to ask member governments for fiscal support to help energize growth.
On a sour note, Nokia <NOKIA.HE> was on track for its worst day since 2001, plummeting 21% after cutting its 2019 and 2020 profit outlook as the company faces pressure from rivals in the 5G industry.
The telecom maker’s report dragged tech stocks <.SX8P> lower for a third straight day, and weighed on Helsinki-listed stocks <.OMXHPI>, which fell 2%.
(Reporting by Lisa Pauline Mattackal; Editing by Shounak Dasgupta and Patrick Graham)
