European shares hit more than two-week high as sturdy earnings lift sentiment

European shares reached a two-week high on Thursday (Oct 15) due to robust earnings and a rise in healthcare stocks, acting as a refuge for global investors during a cooling AI trade. Swedish telecom equipment maker Ericsson led the gains with a 6.8% increase, becoming the top performer on the benchmark after reporting stronger-than-anticipated third-quarter results.

The Stoxx 600 index, which tracks major European companies, climbed 0.4% to 640.16 points, marking its highest level since September 30. Healthcare stocks witnessed a 2.4% surge and were among the leading contributors to the index's gains. However, technology shares experienced a 1.5% decline, primarily driven by a 13% drop in German chip systems manufacturer Aixtron.

Other chip stocks such as Infineon and Soitec also saw a 5.2% and 7.7% decrease, respectively, while ASML, a chip equipment maker, dropped 4.2%. Inflation concerns in Europe and higher energy costs prompted investors to seek refuge in healthcare stocks, with Michele Morganti, an equity strategist at Generali Investments, noting that long-duration stocks and their financing are facing increased fear.

The European Central Bank is expected to raise interest rates by a quarter point in December, with an 87% chance according to LSEG data.