European Markets Pare Back Some Losses, UBS Jumps 5%

21 Jul 2021 · 3rd Party Analysis

European Markets Pare Back Some Losses, UBS Jumps 5%

WRITTEN BY ThorFX

In Summary

  • European bourses stage a rebound along with their Wall Street peers
  • UBS reports a 63% jump in profit to $2bn for the June quarter

Shares in Europe were able to erase some of the heavy losses on Tuesday after their worst single-day performance of the year. Investors’ fears were soothed by several optimistic corporate earnings reports that lifted the market sentiment and provided some fuel for the broad market despite the continuing Delta virus threats.

The pan-continental Stoxx 600 Europe clawed back 0.52%, or 2.32 points, to 446.61. Worries about the highly transmissible Delta variant of the coronavirus seem to have subsided as market participants felt confident to bet on risky assets from a wide array of sectors. The region-based index slumped 2.3% the previous day on fears that the infectious disease could dent the economic growth.

Stocks across the board pushed higher, from economically sensitive shares to technology companies. British airline easyJet climbed 1.9%, while Norwegian telecoms operator Telenor gained 2.3%.

UBS, the Swiss banking firm and the largest wealth manager in the world, added 5.02%, or $0.73, to $15.27 after the company reported a 63% jump in second-quarter net profit. The profit for the second trimester stood at $2bn, significantly above the consensus of $1.32bn. The Swiss banking giant’s better-than-expected earnings were largely driven by a return of wealth management activity amid the reopening economy. The success, according to the earnings report, was due to “favorable market conditions and investor sentiment,” and “continued momentum inflows and volume growth.”

“Our growth in the second quarter was underpinned by the relationships we have built and strengthened throughout the pandemic,” UBS CEO Ralph Hamers said in a statement. UBS expects the upward momentum to be sustained as it believes its “strategic choices and initiative” will continue to pay off.

Real-Economy Stocks Fare Well

Meanwhile, US stocks rallied on Tuesday as investors rushed to buy shares that were most pressured during Monday’s steep sell-off. The Dow Jones Industrial Average rebounded nearly 550 points, almost erasing its 725-point Monday loss.

Investors in the US shrugged off Delta concerns and flocked to airlines, cruise companies, and other real-economy stocks. Bank shares staged a comeback rally along with energy and industrial stocks. Technology companies also snapped back with Apple adding a 2.6% gain.

The S&P500 and the Nasdaq Composite both advanced by more than 1.50%. The broad-based market index ended the session just a few points away from erasing its loss made the previous day. The tech-focused index gained 223.89 points, following its 152.25 point-decline on Monday. The US dollar climbed against a basket of currencies, including the euro and the Japanese yen.

In individual stock action, streaming giant Netflix reported weaker-than-expected earnings for the second quarter of 2021. Earnings per share arrived at $2.97 vs $3.16 expected. The company said it added 1.54 million paying customers for the quarter ended June, bringing its total user count to 209 million. The company’s revenue of $7.34bn beat estimates of $7.32bn. Netflix confirmed it was expanding its services

into the gaming industry with focus on mobile games. The additional feature will come at no extra cost for subscribers.

Bitcoin fell below $30,000 per coin yesterday after days of flat trading. The selling wave triggered a broad downturn in the cryptocurrency market. The downside pressure, however, didn’t lead to a major decline. Bitcoin’s price held steady around $29,500 and ended the session at $29,800, lower by about 3% on the day.

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