SAP, LVMH earnings nudge European stocks higher

(Reuters) -European stocks inched up on Wednesday, as upbeat earnings from German software firm SAP and French luxury goods maker LVMH offset concerns about a potential setback to the continent’s COVID-19 vaccination programme.

The pan-European STOXX 600 index rose 0.2%, with technology stocks leading gains with a 1.0% rise after their U.S. peers rallied overnight.

SAP jumped 4.2% as it nudged its outlook for 2021 revenue higher after reporting first-quarter results that showed a rise in cloud sales.

LVMH gained 3% to hit a record high after sales bounced back far more quickly than expected in early 2021 as Chinese and U.S. shoppers made the most of easing COVID-19 restrictions.

Other luxury stocks including Gucci-owner Kering, Richemont and Hermes added between 1.2% and 1.7%.

“Strong brand desirability and pricing power are enabling LVMH group brands to reinforce its leadership position in the global luxury goods market, consistently,” Deutsche Bank analysts said.

Later in the day, all eyes will turn to U.S. banks including JPMorgan Chase, Goldman Sachs and Wells Fargo that are set to publish their quarterly reports.

European stocks have notched all-time highs in the recent days on hopes of a strong quarterly reporting season, as well as a rapid recovery in the global economy despite a resurgent COVID-19 pandemic.

Earnings for companies listed on the STOXX 600 are expected to jump 55.7% in the first quarter, according to Refinitiv IBES data, more than the 47.4% rise forecast a week earlier.

“Markets seem to be erring on the side of taking positive views rather than negative,” said Connor Campbell, analyst at SpredEx. “Investors pretty much seem focussed on optimism around post-COVID recovery.”

There were worries about the pace of vaccination, as Johnson & Johnson said it would delay rolling out its COVID-19 vaccine in Europe after U.S. health agencies recommended pausing its use following cases of rare blood clots.

Britain’s biggest retailer Tesco fell 2.7% after reporting a 20% drop in full-year pretax profit.

Shares in Credit Suisse dropped 1.3% to a fresh five-month low as it continued to unwind positions in several companies related to last month’s meltdown of Archegos Capital, according to traders.

British airline easyJet rose 2.9% after saying it expected to start to fly more from late May onwards.

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