European shares peak on earnings optimism, rate cut hopes

European shares reached their highest point in over a month on Tuesday, buoyed by a wave of positive corporate earnings reports and the optimistic atmosphere surrounding potential interest rate cuts, as reported by Reuters.

The pan-European STOXX 600 index rose by 0.6 per cent as of 0710 GMT, building on its one-week high from Monday.

UBS, a Swiss bank, saw its shares surge by 6.3 per cent after its first-quarter net income nearly tripled expectations, marking its first quarterly profit since its acquisition of Credit Suisse. This positive news contributed to a 1.8 per cent rise in the financial services index.

Italy’s second-largest bank, UniCredit, also experienced a nearly 3 per cent increase in its shares. This followed the bank’s announcement of a higher-than-expected net income and an increase in capital levels, leading to an upward revision of its investor reward guidance for the year.

However, not all the news was positive. Infineon, a German chip manufacturer, saw its shares advance by 6.5 per cent , despite announcing a cost-saving programme in response to a lowered full-year revenue outlook.

Additionally, Coloplast, a Danish medical equipment manufacturer, saw its shares drop by 5.1 per cent following a miss in its second-quarter earnings.

The equity market was further supported by lower eurozone bond yields, spurred by increased speculation of rate cuts by the Federal Reserve and European Central Bank this year, particularly in light of Friday’s weak US jobs data.