European shares rise on strong earnings, pharma boost

By Ankika Biswas and Bansari Mayur Kamdar

(Reuters) -European shares rose on Wednesday, supported by gains in healthcare stocks and strong earnings reports, while investors assessed a slew of economic data and comments from central bankers for cues on European Central Bank’s rate hike path.

The pan-European closed 0.3% higher.

Data showed euro zone retail sales fell roughly in line with expectations in September, while another survey showed euro zone consumers have raised their inflation expectations over the next 12 months to 4%.

“Looking ahead to Q4, the squeeze on real incomes should end, as inflation continues to slide and wage growth remains elevated,” said Melanie Debono, senior Europe economist at Pantheon Macroeconomics.

“But survey measures of demand suggest consumers are in little mood to spend and consumer confidence remains subdued.”

The ECB needs to see further progress in dampening inflationary pressures, and companies along with governments need to chip in to prevent more policy tightening, said the central bank policymakers.

The U.S. Federal Reserve Governor Michelle Bowman also flagged the possibility of further rate hikes given the strength of the U.S. economy.

On the earnings front, Danish wind turbine maker Vestas jumped 9.8% following better-than-expected third-quarter operating profits and revenue.

Continental said it expects a strong fourth quarter for its automotive business and higher growth in the global auto market this year than previously forecast, lifting shares of the auto parts manufacturer 4.1% higher.

The automobile sector and retail stocks led gains for the day, both adding 1.1% each.

British retailer Marks & Spencer (OTC:) soared 8.4% on a much better-than-expected 75% rise in first-half profit.

Germany’s Commerzbank (ETR:) rose 0.7% as net profit more than tripled in the third quarter, better than expected.

Danish medical equipment maker Ambu jumped 9.0% on raising its full-year EBIT margin. The company also led gains among healthcare stocks.

Genmab (NASDAQ:) rose 7.1% after hiking the low end of its 2023 revenue guidance.

Meanwhile, Swiss Life Holding AG shed 5.9% after the insurer’s full-year outlook on real estate worried markets and supermarket group Ahold Delhaize fell 7.2% after trimming its 2023 earnings forecast and flagging margin weakness in the United States.

Of the STOXX 600 companies that have reported third-quarter results, 55.3% topped earnings expectations, slightly above the typical rate of 54%, LSEG data showed on Tuesday.

Utilities fell 1.1%, with Europe’s largest energy networks operator, E.ON, easing 0.8% on expecting a severe hit to fourth-quarter profit at its retail division.

Meanwhile, Portugal’s PSI Index inched 0.1% higher after Tuesday’s 2.5% slide following the unexpected resignation of Prime Minister Antonio Costa.