Europe Markets: Banks rally while techs struggle as European stocks edge higher

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Deutsche Bank shares rallied Thursday after the German lender reported a surprisingly strong fourth-quarter profit, driven by asset management and corporate banking units.

Deutsche Bank
DBK,
+4.47%

share rose 5% as earnings rose to €315 million from €189 million, which will well ahead of the €26 million that analysts had forecast. Revenue also topped expectations, and Deutsche Bank said it would resume payouts with a €300 million stock buyback and a 20 eurocent dividend.

The banking sector more broadly benefited from rising bond yields in the wake of the hawkish press conference from Fed Chair Jerome Powell, with HSBC
HSBA,
+3.88%

and Banco Santander
SAN,
+2.12%

also gaining ground.

The Stoxx Europe 600
SXXP,
+0.28%

rose just 0.1% to 467.53, as banking stock strength was countered by weakness in the technology sector as bond yields rose.

SAP
SAP,
-5.53%

struggled, as the German software company had already preannounced fourth-quarter results, and reiterated 2022 guidance.

Of the major regional indexes, the German DAX
DAX,
+0.03%

declined 0.2%, the French CAC 40
PX1,
+0.15%

declined 0.1% and the U.K. FTSE 100
UKX,
+0.87%

increased 0.7%.

Orpea
ORP,
-8.91%

shares dropped 9%, sliding for a fourth straight session, as investors analyzed a book alleging misconduct at the nursing home operator.

Louise Boyer Grabeldinger, an analyst at Stifel, said some of the accusations could lead to legal action and fines, and the brand image impact may hurt occupancy rates. Longer term, there could be a major group reorganization and higher structural costs. Depending on the assumed multiple, the market is forecasting a drop in earnings this year between 40% and 60%.

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