European shares dip as financials curb Apple-led tech rally
Reuters
Published Aug 02, 2017 10:07
European shares dip as financials curb Apple-led tech rally
By Kit Rees
LONDON (Reuters) - Semiconductor firms' shares were a bright spot on Wednesday in a lacklustre European market, weighed down by a fall among mining stocks and banks.
The pan-European STOXX 600 (STOXX) index as well euro zone bluechips fell 0.2 percent. Britain's FTSE 100 (FTSE) slipped 0.3 percent.
Tech stocks (SX8P) were among the strongest sectoral performers with Apple (O:AAPL) suppliers Dialog Semiconductor (DE:DLGS) and AMS (S:AMS) jumping 3.8 percent and 4.7 percent respectively after optimism on future demand for the iPhone lifted Apple shares to a record high overnight.
"The big movers that we see in the German market today are in technology," David Madden, market analyst at CMC Markets UK, said.
The rise in tech was not enough to outweigh falls among mining firms (SXPP) and oil stocks (SXEP), which declined on the back of weaker metals and oil prices.
Iron ore miner Rio Tinto (L:RIO) was the biggest faller in the basic resources sector, dropping 2.3 percent after it reported first half earnings. Analysts said they were slightly behind their expectations. The firm also announced an interim dividend and an additional $1 billion share buyback.
"We were disappointed at the increased buyback – we would have preferred to see a higher dividend instead," analysts at Shore Capital Markets said in a note.
CMC Markets' Madden added that results which undershot expectations were being punished more than upbeat earnings were being rewarded.
"It's almost like investors are happy to pounce on negative news and sell negative news, but they're not as keen to go out and buy when the results are good."
Valuations are already high and running above long-term averages, suggesting that good earnings are much less a surprise than earnings disappointments.
Disappointing results from Societe Generale (PA:SOGN) and Commerzbank (DE:CBKG) were a drag on euro zone banks. The sector index (SX7E) fell 1.2 percent. Natixis (PA:CNAT) jumped around 2 percent, however, on the back of higher profits for the period.
Well-received earnings boosted shares in gambling firm William Hill (L:WMH), which rocketed more than 9 percent to the top of the STOXX, while results also spurred sizeable moves in Hugo Boss (DE:BOSSn) and Lufthansa (DE:LHAG).
Get The App
Around halfway through the results season, second quarter earnings in Europe are expected to increase 13.4 percent year on year, or 11.2 percent excluding the energy sector, according to Thomson Reuters I/B/E/S.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.