Europe midday: Rally continues as upbeat earnings please investors
European shares continued to rally on Wednesday as upbeat earnings reports and a strong rise in travel stocks boosted sentiment.
The pan-European Stoxx 600 index extended gains at lunchtime to be up 1.32% trade with all major regional bourses higher. The UK's FTSE 100 outperformed with a 1.62% rise.
IG analyst Joshua Mahony said the rise in share prices came despite Chinese efforts to undermine prices in key commodities, with the government laying out plans to auction reserves of zinc, aluminium, and copper.
He added that investors were still eyeing the rapid spread of the Covid Delta variant, with concerns that those countries without high vaccination levels "will be unable to cope without heavy restrictions, while the UK provides the blueprint for reopening efforts in the face of huge numbers of Covid cases".
"Commodity prices are under pressure in the wake of a Chinese announcement that they will auction reserves of copper, aluminium, and zinc in a bid to quell price pressures. The rise in Chinese PPI highlights how input costs are driving up inflation, and bulls will hope that this alleviates some of the underlying reasons behind the recent rise in headline CPI."
In corporate news, shares in Swedish bike and roof rack maker Thule soared 13% to top the Stoxx as the company reported sales growth for the second quarter of 58% compared with the year-earlier period, making four quarters of growth in a row.
UK fashion retailer Next soared almost 8% lifting annual profits guidance to the upper end of forecasts.
Travel stocks were also in favour, with cruise line operator Carnival up 5.6% after announcing more sailings in the summer/autumn season on Tuesday. British Airways owner IAG, and budget carrier easyJet were also higher.
Future rallied 9.47% after the magazine publisher and GoCompare owner said full-year profitability was set to be "materially ahead" of current market expectations amid a continued strong performance.
Dutch semiconductor equipment maker ASML gained as it raised its 2021 sales outlook and announced a new share buyback plan.
Swiss drugmaker Novartis added 2.1% as its second-quarter core net income beat market expectations, boosted by its key drug brands.
Among decliners, German business software group SAP slid 3.9% despite raising its outlook for the second time this year.
Mercedes-Benz maker Daimler fell 1.1% after it warned that a global shortage of semiconductor chips will dent car sales in the second half of 2021.
Royal Mail slumped after it said revenues rose 12.5% in the first quarter as people continued to shop online with Covid lockdown restrictions still in place, but that UK parcel volumes had started to slip as curbs were lifted.
Dutch food and biochemicals company Corbion fell to the bottom of the Stoxx, down 8% after Barclays cut the stock to “underweight”.