Europe close: Stocks rise but some analysts remain cautious

7th Aug 2024 19:37

(Sharecast News) - European shares advanced on Wednesday as investors played catch up with the bounce on Wall Street.

Helping to lift investor sentiment were comments from the Bank of Japan's deputy governor, who attempted to calm volatile markets.

But the question on everyone's mind was how quickly, or not, the remaining carry trades financed by cheap Japanese yen would continue to unwind. Some analysts believed the process to be a bit over half way over.

The pan-regional Stoxx 600 index ended up 1.54% at 495.96 points, with all major continental bourses higher.

Italy's FTSE Mib fared best, adding 2.33% to reach 31,831.64.

Significantly, the US dollar vaulted higher by 1.7% to 146.79 yen and in afternoon trading Wall Street's so-called 'fear gauge', the VIX volatility index had continued to retrace the surge seen over the last few sessions.

Overnight, the BoJ's Uchida Shinichi had said that rates would not rise while markets are volatile.

His remarks were in response to extreme movements in the stock market two days before that saw the biggest sell-off since 1987's Black Monday crash.

Derren Nathan, head of equity research at financial platform Hargreaves Lansdown said: "The Bear that chased markets off a cliff in recent days is taking a well-earned break, but time will tell if it's just hibernating."

In economic news, industrial production in Germany jumped in June, led by a partial rebound in output from the auto sector. On a calendar and seasonally-adjusted basis, total output advanced at a month-on-month pace of 1.4%, according to Destatis. Economists had pencilled in a rise of 0.9%.

In equity news, Evotec shares plunged by 35% as the German drug discovery company lowered annual earnings guidance.

Novo Nordisk shares were lower by 7% as the Danish pharma company lowered profit forecasts after smaller-than-expected second quarter net earnings.

Sportswear maker Puma slumped 11% after it narrowed its outlook for full-year core profit.

Commerzbank fell 4% after second-quarter net profit dropped 5%.

Car parts maker Continental advanced 7% after second-quarter results smashed estimates, while Just Eat Takeaway soared by 12% after JP Morgan upgraded the rating on the stock to 'overweight' from 'neutral'.