STOXX 600 inches Up, tech wins over banking woes

European stock markets experienced a varied day of trading on Wednesday, with the STOXX 600 index seeing a modest increase of 0.2 per cent, reaching levels not seen in over a week, largely driven by a 2.3 per cent rise in the technology sector, according to Reuters.

This uptick came after ASM International, a semiconductor equipment supplier, announced an optimistic second-quarter revenue outlook, citing strong demand from China and increased sales in the advanced logic and memory sectors.

ASM International’s shares soared by nearly 10 per cent, dominating the Dutch market and potentially marking their best performance in eight months.

However, the banking sector faced challenges, with a 0.5 per cent drop in the eurozone banking index, largely due to Handelsbanken’s 10 per cent fall after reporting lower-than-expected net profits for the first quarter, attributed to rising costs.

Luxury brand Kering also suffered a significant loss, dropping 7.9 per cent on the French CAC 40 index after predicting a 40 per cent to 45 per cent decrease in its first-half operating profit.

Despite these setbacks, over 61.8 per cent of the STOXX 600 companies outperformed analyst expectations for the first quarter, surpassing the historical average of 54 per cent.

Financial experts, including Anthi Tsouvali from State Street, suggest that while tighter economic conditions are noticeable, there’s no immediate concern for a credit crunch, even if the European Central Bank (ECB) opts for a rate cut in the summer.

This sentiment is echoed by Bundesbank President Joachim Nagel, who cautioned that a potential ECB rate cut in June doesn’t guarantee further easing, given persistent inflation concerns.

In other market news, Swiss healthcare giant Roche saw its shares decline by 2.7 per cent after announcing a 6 per cent drop in first-quarter sales, mainly due to reduced COVID-related revenue.

Volvo Car also reported a 6.1 per cent decrease following a disappointing quarterly profit report, blaming lower contract manufacturing revenue.

Conversely, Belgian semiconductor company Melexis surged 17.1 per cent, leading Belgium’s main index, after projecting second-quarter sales that exceeded analyst predictions.

The FTSE 100 index in London outshone its European counterparts, adding 0.5 per cent to reach a new record high of 8,083.92 points, indicating a robust performance in the UK market.