Tech, earnings lift European stocks as Biden inches closer to victory

(Reuters) – European shares hit a two-week high on Thursday, supported by a handful of strong earnings reports, more stimulus for Britain’s economy and a surge in Wall Street stock futures, as Democrat Joe Biden moved closer to victory in the U.S. presidential race.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, November 4, 2020. REUTERS/Staff

In its fifth day of gains, the pan-European STOXX 600 index .STOXX rose 0.6% to hit its highest level since Oct. 20, with technology stocks .SX8P once again leading the way.

Dialog Semiconductor DLGS.DE jumped 7.2% after it reported third-quarter revenue at the higher end of its previously forecast range.

French lender Societe Generale SOGN.PA gained 2.8% after it swung back to a quarterly profit as its equity trading business continued to recover from a weak start to the year.

Meanwhile, U.S. futures jumped over 1%, as Biden held narrow leads in Nevada and Arizona, while Republican President Donald Trump was watching his slim advantage fade in must-win states Pennsylvania and Georgia as mail-in and absentee votes were being counted.

Tech stocks looked set to outperform, as the likelihood of a gridlock in U.S. Congress made investors optimistic that tighter regulation and higher corporate taxes on American firms might be hard to enact. [MKTS/GLOB]

Chris Bailey, European strategist at Raymond James in London, said it was a combination of the election and COVID-19 trade coming together.

“The election trade is that there isn’t a ‘blue sweep’. Those conditions where you would’ve perhaps favoured reflation – rising bond yields which would’ve supported value stocks – switched away a bit,” Bailey said.

“We’re now back to favouring COVID-19 trade, which is obviously beneficiaries of work-from-home and lower bond yields.”

Defensive utilities .SX6P rose 1.4%, but banks .SX7P fell 1.0%, coming under pressure after Dutch bank ING Groep NV INGA.AS fell 7.1% on reporting lower-than-expected pre-tax profit.

Germany’s Commerzbank CBKG.DE dropped 6.5% after it reported quarterly loss, as the lender undergoes a restructuring and deals with fallout from the coronavirus crisis.

Munich-based broadcaster ProSiebenSat.1 Media PSMGn.DE jumped 10.3% after it reinstated its outlook for the full year and returned to profit in the third quarter.

UK’s FTSE .FTSE was flat, with sterling on the rise after the Bank of England increased its already huge bond-buying stimulus by a bigger-than-expected 150 billion pounds ($195 billion). [.L]

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