Europe midday: Shares maintain record highs on upbeat earnings, PMIs
European shares stayed at record highs on Wednesday as upbeat corporate earnings offset investor worries about the rising number of Covid Delta variant cases in the latter.
The pan-European Stoxx 600 index was up 0.47% with all regional bourses higher. Asia shares were boosted by a private survey which showed Chinese services activity growth accelerating in July.
However, the rapid rise in Covid-19 infections from the highly transmissible Delta variant throughout the region was keeping a lid on investor sentiment.
“Concerns that rising infection rates across Asia, and in China especially, appear to be causing anxiety that the rebound story in that part of the world is about to become the weakest link in the global recovery story,” said CMC Markets analyst Michael Hewson.
“Not only are we hearing about more cases in China, but we are also getting an acceleration of cases across Indonesia and Thailand, as the virus hunts out the parts of the global economy with low vaccination rates.”
"This hasn’t as yet been reflected in some of the more recent economic data out of China, with this morning’s latest Caixin services PMI for July showing a rebound in economic activity to 54.9, after slowing to 50.3 in June."
On the data front, a PMI survey showed euro zone business activity raced ahead in July, expanding at its fastest pace in 15 years, as the lifting of more restrictions and an accelerated vaccine drive injected life into the bloc’s dominant service industry.
However, supply chain disruptions and labour shortages meant input prices surged at the fastest rate in more than two decades.
In equity news Commerzbank shares fell almost 6% as the German lender reported a net loss of €527m in the second quarter, as restructuring expenses and an exceptional write-off to an outsourcing project wiped out profits.
Shares in Siemens Energy fell as the company blamed turbine subsidiary Siemens Gamesa for a 37% drop in third-quarter orders and a reduced target corridor for its main profit margin.
Dutch chemicals distribution company IMCD climbed 9% to the top of the index after strong first-half results.
UK house builder Taylor Wimpey rose after upgrading annual guidance and reinstating its dividend as it swung to a first-half profit on the back of a booming housing market. Rival Barratt Developments was also up on the news.
Coffee company JDE Peet’s jumped 5% on reporting better-than-expected operating profit for the first half of 2021.