Europe midday: Shares hold gains despite Evotec plunge on outlook

(Sharecast News) - European shares made slight gains on Wednesday as the UK's FTSE 100 posted another intra-day record, but comments from a European Central Bank policy maker on rate cuts also tempered sentiment, while shares in German biotech firm Evotec slumped by a third on a disappointing outlook.

The pan-European Stoxx 600 index was up 0.14% at 508.49 in early deals. The FTSE 100 gained 0.49% to 8083.94.

Joachim Nagel, president of Germany's Bundesbank, said that he would support a rate cut in June, if upcoming economic data increases the ECB's confidence that inflation would soon return back to the 2% target.

"However, such a step would not necessarily be followed by a series of rate cuts," he told a DZ Bank Capital Markets conference. "Given the current uncertainty, we cannot pre-commit to a particular rate path."

Nagel also expressed caution about the outlook for inflation, noting its persistence in the services sector, driven by "continued strong wage growth", and added that core inflation remained high.

"I am not fully convinced yet that inflation will actually return to target in a timely and sustained manner," he said.

Market Scope analyst Joshua Mahony said the weakness of the euro and pound "highlight the growing confidence that we will soon see the ECB and Bank of England shift onto a new phase of monetary easing, with European indices similarly being driven by expectations of a June pivot".

"The latest German Ifo business climate report saw the metric climb to an 11-month high, building on the PMI gains that saw the German composite PMI surge through 50 for the first time since June 2023. There are clear signs of economic health returning for the German economy, with the eurozone looking well set up to take full advantage of the dovish pivot from the ECB."

In equity news, shares were down 35% to six-year lows after the company said demand and the economic climate would only improve by the end of 2024 outlook.

Kering shares slumped 9% as the luxury goods firm forecast a 40-45% plunge in first-half operating profit.

Elsewhere, computer chip supplier ASMI gained as it raised its second-quarter revenue forecast, citing stronger-than-expected Chinese demand and higher sales in advanced logic and memory.

Volvo Cars fell despite the Swedish automaker posting a rise in adjusted operating earnings, helped by lower material costs and higher volumes.

Allfunds also plunged 9% on reports the fund distribution company abandoned discussions over a potential sale.

Reporting by Frank Prenesti for Sharecast.com