European stocks rallied on Wednesday as investors were cheered by positive bank earnings in the region.
The pan-European Stoxx 600 index was up 0.21% in early trade after a weaker session on Tuesday when fears of tighter regulation of Chinese tech companies shook investors.
Eyes are also firmly on the US Federal Reserve’s two-day policy meeting which starts today.
“It almost seems counterintuitive that the change of narrative from the June Fed meeting, which saw a number of Fed members start to talk in terms of a tapering of asset purchases, as well as a 2022 rate hike, appears to have come just before an increase in concerns about a slowdown in the global recovery story,” said CMC Markets analyst Michael Hewson.
“The sharp rise in Delta variant cases seen in the last few weeks has fuelled concerns, that for all the optimism over economic reopening, the reality is that coming out of the pandemic is likely to be a much longer road than the market has been originally pricing.”
“Some of the fears over inflation have already started to subside in the bond markets, whether by accident or design, largely due to cooling commodity prices, as well as concerns that the global recovery may well be weaker than anticipated all the way back in March.”
In equity news, German lender Deutsche Bank rose after it delivered a better-than-expected quarterly profit, while UK’s Barclays jumped 4% as it announced resumption of shareholder payouts after beating first-half profit expectations.
Shares in French consulting and IT services provider Capgemini were up after it raised its 2021 outlook.
Wizz Air gained 4.4% after it forecast capacity to ramp up to between 90% – 100% of pre-pandemic levels in July and August. Rival budget carrier easyJet and British Airways owner IAG were higher on a readacross.
Wealth manager St James’s Place topped the Stoxx with a rise of 5.37% as it reported a jump in its first half underlying cash result amid a sharp increase in its funds under management.
Shares in Adecco Group fell 6% after the company said it had agreed to buy AKKA Technologies in a €2bn deal, with Adecco combining AKKA with its own Modis tech brand.
