Earnings steady European shares after Monday’s rout

European shares steadied on Tuesday following their worst sell-off since June 2020, catching up with a late recovery on Wall Street, while upbeat earnings from Ericsson (BS:ERICAs) and Logitech provided some cheer.

Fears about aggressive monetary policy tightening moves by the U.S. Federal Reserve and the potential for military conflict in Ukraine saw a wild session on Wall Street on Monday, with the main indexes breaching key levels at the open and closing higher. [.N]

U.S. futures and Asian stocks fell again on Tuesday, although the top European stock index gained 0.6% after shedding 3.8% in the previous session.

“We’re in a world where most players in the market have never witnessed a rising rate environment, all they’ve had is the Fed pumping liquidity in, and now it’s a shock for the participants,” said Keith Temperton, sales trader at Forte Securities.

“We can go significantly lower. The market is having a reset in valuation.”

Investors expect the Fed to signal on Wednesday that it plans to raise rates in March after slashing borrowing costs to near-zero soon after the onset of the pandemic nearly two years ago.

Fed funds futures, which track short-term rate expectations, have priced in a total of four rate increases this year, as the central bank fights to stem soaring inflation.

Rate-sensitive banking stocks were the top gainers in Europe, up 1.6%, followed by telecoms, mining and travel & leisure sectors.

Tech stocks inched up 0.6% after sliding to more than seven-month lows in the previous session.

In earnings-driven moves, Swiss computer peripherals-maker Logitech International jumped 9.4% after raising its earnings forecast for the current fiscal year.

Sweden’s Ericsson gained 8.3% as it reported fourth-quarter core earnings above market estimates, helped by higher sales of telecoms gear with more countries rolling out 5G networks.

Credit Suisse (SIX:CSGN) slipped 1.1% to hit a 20-month low after the scandal-hit lender warned it was likely to report a net loss in the fourth quarter as it flagged fresh legal costs and said business in its trading and wealth management divisions had slowed.

Watchmaker Swatch Group (SIX:UHR) slipped 1% even as it forecast double-digit sales growth in local currencies this year.

Analysts expect profit for STOXX 600 companies to grow 48.6% in the fourth quarter, as per data from Refinitiv IBES, with energy, basic materials, industrial and financial sectors likely to see the biggest growth.