Apple supplier AMS soars as earnings drive European shares

Shares of Apple suppliers were boosted on Tuesday by robust results from chipmaker AMS as earnings drove strong European share price moves while regional and country benchmarks remained muted.

The pan-European STOXX 600 was down 0.1 percent, while London’s FTSE 100 retreated 0.1 percent. Paris’s CAC 40 and Germany’s DAX rose 0.1 percent.

Apple supplier AMS jumped 18 percent after reporting results. While third-quarter sales were just under expectations, analysts said strong fourth-quarter guidance offset the slight miss.

“With AMS shares down 15 percent in the last month given concerns around the impact from iPhone X delays/constraints, we see solid Q4 guidance as a relief till we get more clarity on iPhone sell-in trends when Apple reports on Nov. 2,” Credit Suisse analysts said in a note.

Other Apple suppliers exposed to the iPhone X roll-out also rose, with Dialog Semiconductor up 3.6 percent and STMicroelectronics up 0.8 percent.

Swedish mining company Boliden disappointed investors with its trading update and fell 9.5 percent, while defence firm Saab rose 5 percent after it reported order bookings and profits above market forecasts.

Germany’s DAX was boosted by Commerzbank shares rising 3.5 percent after a source said the German lender hired Goldman Sachs to help it defend itself against potential takeover bids. Speculation grew that Commerzbank may attract bids.

In Italy, oil services group Saipem rose 9.3 percent, set for its best day in 13 months, after confirming its profit guidance for the year. It reported a good order intake in the third quarter and strong offshore business.

This helped push oil and gas stocks up 0.2 percent.

Analysts said European earnings may be able to outperform against forecasts which were revised down ahead of the third-quarter results season.

“Expectations are lower and it will potentially be easier for there to be surprises,” said Pierre Bose, head of European equity strategy at Credit Suisse.

Randstad, the world’s second-largest staffing company, slipped 5.5 percent after reporting large one-off costs at Monster Worldwide, the U.S. job hunting portal it acquired last year.

German plastics maker Covestro jumped 5.8 percent to a record high after reporting a 50 percent increase in third-quarter earnings and a share buyback of up to 1.5 billion euros.

Earnings aside, trading remained timid as investors awaited the next market catalyst: the European Central Bank meeting on Thursday.

“The market is anticipating that the ECB highlights some kind of inclination towards lower for longer, and that’s supportive for equities,” said Credit Suisse’s Bose.

“If they were a bit more hawkish that could take a bit of the steam out of the rally we’ve seen.”
Source: Reuters (Reporting by Julien Ponthus and Helen Reid; Editing by Georgina Prodhan/Mark Heinrich)