European equity markets remained close to record levels on Wednesday, supported by positive company updates, firm technology shares and continued strength in energy-related stocks.
The STOXX Europe 600 moved 0.2% higher by midday, with technology and oil and gas shares among the stronger areas of the market. The sector mix remained selective, but the broader picture was constructive as earnings upgrades, order growth and corporate activity continued to provide support.
Energy stocks benefited from firm oil prices, with Brent crude trading close to $89 a barrel. Geopolitical tensions in the Middle East remained an important factor, but higher energy prices also reinforced the earnings outlook for companies exposed to the sector. Aerospace and defence shares also attracted demand as governments and markets continued to focus on security and defence spending.
Attention was also turning to US inflation data, which could influence expectations for the Federal Reserve’s September meeting. Markets are assessing whether another rate increase may be required, making the inflation reading an important near-term driver for global equity valuations. Even so, European markets entered the event from a position of relative strength, with volatility remaining contained.
The Euro Stoxx 50 volatility index stood at 15.69, below the level of 20 often associated with more unsettled market conditions.
German shipbuilder TKMS climbed more than 14% after raising its full-year outlook for the second time in six months. The company also reported an order backlog of $28.8 billion, providing strong visibility over future activity. With defence spending remaining a strategic priority across many markets, the size of the backlog strengthens the company’s positioning and reduces uncertainty around future demand.
Danish wind turbine manufacturer Vestas also advanced after lifting its full-year earnings margin outlook. The upgrade reinforced confidence in improving profitability and showed that stronger operating conditions are beginning to translate into better financial expectations.
Balfour Beatty gained after increasing its annual operating profit forecast, supported by strong infrastructure demand in the US and UK. The update highlights the continuing strength of large-scale infrastructure spending and gives the group greater visibility over earnings as it moves through the second half of the year.
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