European shares hit fresh nine-month high on earnings boost By Reuters

By Ankika Biswas

(Reuters) – European shares hit a nine-month high on Thursday as Germany’s Siemens AG (OTC:) and British drugmaker AstraZeneca (NASDAQ:) boosted earnings euphoria, and helped offset the risk-off sentiment after hawkish Federal Reserve speakers stressed the need for more rate hikes.

The pan-European was up 0.8% at 0920 GMT, extending gains for a third straight session.

Industrials were the top sector performers in the index, bolstered by a 7.1% gain in Siemens on better-than-expected earnings and higher full-year sales outlook.

Electric component maker Legrand jumped 6.9% as its 2022 revenue and operating profit beat estimate.

Shares of Sweco AB, a Swedish construction and engineering company, jumped 11% to top the STOXX 600 following its upbeat fourth-quarter earnings. Standard Chartered (OTC:) came in close with a 9% jump on reports of continued buyout interest from the UAE’s biggest lender First Abu Dhabi Bank.

An over 5% gain in AstraZeneca on 2023 earnings and revenue growth forecast boosted the healthcare sub-index.

Among the top laggards, Credit Suisse Group slid 3.7% on reporting the worst annual loss since the 2008 global financial crisis and warning that a further “substantial” loss would come this year.

“Numbers have been fairly positive, but also the guidance has been better than expected, which has been the concern for an awful lot of companies,” said Michael Hewson, chief markets analyst at CMC Markets in London, who also sees persisting challenges to growth and profitability.

Of the 93 STOXX 600 companies that have reported earnings so far, more than half have beaten market expectations, Refinitiv data showed on Tuesday.

On the economic front, German consumer prices, harmonized to compare with other European Union countries, rose in January by a less-than-anticipated 9.2% year-on-year. The German was up 1.1% and hit an over one-year high.

Signs of economic resilience and better-than-feared corporate earnings have helped European stocks outperform their U.S. counterparts so far this year.

The STOXX 600 has gained around 9% so far this year, higher than a 7% advance in the benchmark U.S. .

“The economic outlook (for Europe) is probably a little bit more positive than what was thought,” Hewson said, “Any recession that we’re likely to get is likely to be shallower.”

U.S. Fed officials on Wednesday hinted that more rate hikes were on the table to further cool inflation, although none suggested that January’s hot jobs report could trigger a more aggressive monetary policy stance.

European Central Bank members such as Luis de Guindos and Klaas Knot stressed the need for the central bank’s rate-hiking cycle lasting for longer to tame stubborn price pressures.