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Europe's markets have reversed losses following strong SAP and LVMH results

Europe's markets have reversed losses following strong SAP and LVMH results

  • Summary:
  • DAX is on positive territory.
  • LVMH higher after Q3 results, citing higher equities than the brand in Q3.
  • Apple suppliers fall on iPhone report, apple says.

On Wednesday, European stocks recouped early losses as positive earnings estimates from German software firm SAP and strong quarterly sales for French luxury goods maker LVMH eased inflation worries.

By 0824 GMT, the pan-European STOXX 600 index (.STOxX) was up 0.2% after losing as much as 0.4% in opening trade. The German DAX (.GDAxI) gained 0.6%, France's CAC 40 (FCHI) was flat, and the UK' FTSE 100 (.FTS) fell 0.4%.

SAP (SAPG.DE) increased 4.5% after it raised its full-year outlook for a third time following favourable quarterly results as more businesses move their IT operations to the cloud.

French luxury goods firm LVMH (LVM.PA) increased by 1.5% as sales at its fashion and leather goods division soared strongly in the third quarter, but overall revenue growth in Asia and the United States eased after a strong first-half performance.

"Lots of growth stocks, luxury, IT, all these have been the most affected by the recent shift in favour of value," said Roland Kaloyan, Societe Generale's head of European equity strategy. "My opinion is that the market's fundamentals are strong, and the recent rotation is an excellent opportunity to build position."

Kaloyan, however, added that the third-quarter earnings season "will be the time for margin and pricing power stories to be truthful."

On Wednesday, data showing that China's export growth unexpectedly increased in September boosted sentiment. read more

Concerns about central banks exiting their pandemic-era stimulus, a global energy crunch, and signs of rising prices have all dampened the outlook for economic recovery, keeping the STOXX 600 nearly flat on the month after falling 3.4% in September.

The International Monetary Fund cut its 2021 global growth forecast to 5.9% from 6.0% on Tuesday, but left a 4.9% forecast for 2022 unchanged.

According to Refinitiv IBES data, third-quarter profit for STOXX 600 firms is expected to rise 46.7%, compared to a 152.6% increase in the previous quarter, with energy and industrial businesses driving the most.

Meanwhile, investors will be following U.S. inflation data due later in the day for clues on the Federal Reserve's monetary policy outlook.

Just Eat (TKWY.AS) (TKYAS.A) was the largest decliner on STOXX 600, down 4.2%, after its third-quarter orders fell short of analysts' expectations. Read more

After Bloomberg reported that iPhone 13 production is likely to be cut, suppliers including STMicroelectronics and AMS, as well as St. Microequipment and Apple Inc (AAPL.O) fell after news that production of the iPhone was cut.

Barratt Developments (BDEV.L), the UK's largest housebuilder, added 4.3% after reporting that forward sales for the past three months had risen above pre-pandemic levels.

Shares in other homebuilders Persimmon (PSN.L), Taylor Wimpey (TW.LL), and Berkeley Group (BKGH. L) rose between 2% and 4%.

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