Europe midday: Shares pace gains but investors remain wary
European shares paced gains towards record highs at midday on Thursday boosted by strong corporate earnings across the region and the US Federal Reserve's decision to maintain loose monetary policy.
The pan-European STOXX 600 index rose 0.4% by 0713 GMT, trading just about 3 points below its record peak.
"Reassuring investors that it is nowhere need pulling the plug on its stimulus programme, the Federal Reserve helped lead to a broadly positive European open," said Spreadex analyst Connor Campbell.
"Though the Fed acknowledged that the US economy is continuing to recover, while removing the word ‘considerable’ when discussing the risks posed by the pandemic, (Fed chairman) Jerome Powell and co. were keen to stress that ‘substantial further progress’ needs to be made regarding full employment and the 2% inflation target before the taps are turned off."
Markets.com analyst Neil Wilson said the Fed's stance "should be a green light for stocks, but the markets are wary right now as they tread record highs and all this stimulus is priced in and the macro outlook well understood".
"The US 10-year bond yield moved to test the 1.65% level. US stock markets closed marginally lower, though the small cap Russell 2000 managed to eke out a small gain. Futures point to solid gains for Wall Street later today when the cash equities open."
In equity news, Finnish telecoms heavyweight Nokia topped the index, surging 15% as growth in sales of network and 5G equipment boosted quarterly earnings.
Shares in medical equipment specialist Smith & Nephew rose 6% as the company reinstated full year guidance after a rise in first quarter revenues driven by increased surgery volumes, acquisitions and new products.
Revenue for the three months to April 3 came in at $1.26bn, up 11.5% on a reported basis and 6.2% on an underlying basis and including a 3.4% boost from foreign exchange and 1.9% from acquisitions.
Consumer goods giant Unilever rose 3.2% as a pick up in home cooking and a strong economic recovery in China drove better-than-expected quarterly sales. The company also announced a share buyback programme up to £3bn.
Oil giant Royal Dutch Shell gained after it raised its dividend by 4% after increasing first quarter profits, while French peer Total rose after reporting first-quarter earnings close to pre-pandemic levels.
French planemaker Airbus added 2% after it posted higher quarterly core earnings.
UK bank NatWest fell 3.8% despite reporting an 82% rise in first-quarter profit as its released money set aside for bad debts early in the Covid pandemic.
Automakers and suppliers took a hit after US carmaker Ford said a global semiconductor shortage may slash second-quarter production by half. Faurecia, Volkswagen and Continental were all lower.