By Steve Goldstein, MarketWatch
European stocks advanced on Thursday, heading higher after two days of losses as one of the Continent’s biggest technology companies said its recovery was surprisingly strong.
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.17% rose 0.4%.
Through Wednesday, the index has gained 31% from its March low.
SAP /zigman2/quotes/203458330/delayed DE:SAP +0.16% /zigman2/quotes/207905606/composite SAP +0.84% was the standout performer, rising 7% as the German business software giant released its second-quarter results early, saying its adjusted operating profit rose 8%, as the Asia Pacific and Japan region had a strong recovery in software license revenue.
That helped the German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.07% to outperform the other regional indexes in Europe, including the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.21% and U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.02% .
The question confronting markets in the short term is whether another round of U.S. stimulus, as well as the European Union recovery fund, get finalized.
The U.K. on Wednesday rolled out a spending package estimated by the government to be worth £30 billion. “Throw Brexit into the mix (what may be the crucial EU Heads of State meeting is on Oct. 15-16) and a potential spike in business failures as we go through Q3 into Q4, and politically, as well as economically, the odds move even more in favor of a much larger fiscal response later in the year,” said David Owen, European economist at Jefferies.
“Markets are staying optimistic but a little cautious at the same time, as the battle between stimulus hopes and virus fears rages on,” said Marios Hadjikyriacos, investment analyst at XM.
Troubled engine maker Rolls-Royce /zigman2/quotes/203646520/delayed UK:RR -0.04% slumped 9%, as the company took a $1.45 billion hit for closing currency hedges early, citing the deterioration in the medium-term outlook caused by COVID-19. Rolls-Royce says that it may announce noncash accounting adjustments when its first-half results are announced.
U.S. jobless claims highlight the economics calendar. Germany reported a 9% rise in exports for May that still left them 29.7% below year-ago levels.
Futures on the Dow Jones Industrial Average /zigman2/quotes/210407078/delayed YM00 -0.22% fell 30 points. U.S. coronavirus cases hit a record high, and the positive testing rate was the highest since May 6, according to data from the COVID-19 tracking project.