Europe midday: Shares higher on upbeat earnings, Yellen comments

European shares were still in the green at lunch on Tuesday, kept afloat by upbeat earnings reports and positive remarks on US stimulus measures by US Treasury Secretary nominee Janet Yellen.

The pan-European Stoxx 600 was up 0.17%, while the UK’s FTSE 100 rose 0.3%, and Germany’s DAX was 0.38% higher. Dow Jones futures were up 199 points after the Martin Luther King holiday.

Former Federal Reserve chair Yellen said the US needs to “act big” with its Covid-19 stimulus package ahead of her hearings before the Senate Finance Committee on Tuesday night. In prepared remarks she said the “smartest” thing to do is aggressively pursue the previously announced plan.

"Economists don't always agree, but I think there is a consensus now: Without further action, we risk a longer, more painful recession now – and long-term scarring of the economy later," Yellen will say.

President-elect Joe Biden's 'American Rescue Plan' includes provisions such as extending enhanced unemployment benefits through to September and increasing those benefits from the current $300 a week to $400 a week, sending direct relief to families in the form of $1,400 checks, the national vaccine distribution plan and a series of other relief measures.

Upbeat corporate earnings also helped to boost sentiment and help markets hold on to gains, although there was some profit taking by lunch time.

“These earnings reports will help provide a bit of clarity on how the corporate world is coping with the latest wave of coronavirus as the markets continue to weigh the rising infection rates globally with the pace of vaccine rollouts,” said Russ Mould, an analyst at AJ Bell.

Swiss computer-software and peripherals company Logitech saw its stock jump 8% at the open, before falling back to a 0.3% rise, after the group guided for 57% - 60% sales growth at constant currencies, compared with its previous outlook of 35% - 40%.

Shares in credit-reporting agency Experian rose after the group said its performance in the last quarter was better than expected, with revenue growth of 7% at constant currencies in the three months to December 31.

Auto shares were down after the European Automobile Manufacturers’ Association reported that passenger-car registrations fell by 3.3% in December 2020 compared with the year prior, topping off the worst year on record — registrations in 2020 fell 24%.

Shares in European car makers were lower, with Daimler, Volkswagen, BMW and Renault all in the red on the news.

However shares in Stellantis, the automotive giant formed out of the merger between Fiat Chrysler and Peugeot, bucked the trend to rise 5%.

Swiss chocolatier Lindt fell after reporting that sales in 2020 slumped 6.1% to 4.02bn Swiss francs — below expectations.