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29.01.2023 01:45 AM
European markets closes the week with growth

Major Western European indexes were trading higher on Friday after falling the day before. European markets advanced after a spectacular rise in US and Asian stock markets. Mining stocks rallied on strong commodity prices.

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The STOXX Europe 600 index was up 0.08% and at 454.36 points.

French CAC 40 gained 0.09%, German DAX gained 0.08% and British FTSE 100 gained 0.09%.

Since the beginning of the year, FTSE 100 gained 3.3%, CAC 40 at 8.2% and DAX at 7.1%. Experts believe that such an amazing growth for January occurred as a result of strong corporate reports of key companies in the region. However, in the near future, analysts are certain that local companies will face serious problems amid a permanent decline in consumer demand.

Biggest gainers and losers

Shares of French luxury goods manufacturers LVMH rose by 0.4%. At the end of last year, profits grew by 17% to 14 billion euros, with 2022 revenue up by 23% to 79 billion euros as main brands, Louis Vuitton and Dior, showed exceptional performances.

The Swedish apparel retailer H&M is down more than 5%. The company reported a threefold decrease in net profit - down to $350 million. At the same time in the fourth quarter of 2022, H&M recorded a net loss of $85 million.

Shares of British supermarket chain Sainsbury's soared by 5.2%. Earlier, retail group Bestway reported that it has built a 3.45% stake in Sainsbury's. At the same time, representatives of Bestway stressed that they are not considering a takeover bid for the British chain.

British retailer Superdry Collapsed by 9.1%. The company lowered its annual profit forecast and said it expected to break even amid weak performance in the wholesale segment.

Shares of the Dutch manufacturer of lithographic equipment for the microelectronic industry ASML Holding N.V. fell by 0.7%. Bloomberg reported that Japan and the Netherlands plan to join the US in limiting China's access to advanced semiconductor machinery. Holland is expected to impose restrictions on local company ASML, effectively removing the company's ability to supply China with scanners for immersion lithography work.

French outdoor advertising operator JCDecaux SE is up 5.3% on management's report of a 5.1% organic revenue increase for the fourth quarter of fiscal 2022. JCDecaux SE's final performance was better than market forecasts.

Swedish steelmaker SSAB AB's share price soared 9.6% on the back of its October-December 2022 net loss. At the same time, the company increased its revenue more than analysts' forecasts and raised the dividend.

Swiss maker of appliances and tools Husqvarna AB surged 13.2%.

French spirits producer Remy Cointreau SA dropped 2.75% on slightly lower revenue in the third quarter of fiscal 2023.

Market sentiment

On Friday, investors were analyzing the financials of key companies in the euro region.

In addition, traders are discussing preliminary data on U.S. gross domestic product growth for the fourth quarter of 2022 from the U.S. Commerce Department. Real GDP increased at an annual rate of 2.9% in Q4 of 2022. Experts on average predicted an increase to 2.6% from 3.2% recorded in the previous quarter.

Over the past year, the U.S. GDP grew by 2.1%. At the same time, the pace of growth in the U.S. economy declined sharply from an increase of 5.9% in 2021.

Also, investors are focused on the upcoming meetings of the world's largest central banks - the U.S. Federal Reserve, the Bank of England and the European Central Bank, scheduled for next week.

During the December meeting, the Fed raised the interest rate by 50 basis points - up to 4.25-4.5% per annum. At the same time, the level of the rate reached the highest since 2007. In his comments after the December meeting, Fed Chairman Jerome Powell said the U.S. central bank will stay on course to tighten monetary policy until consumer prices return to target levels.

The CME FedWatch tool showed a 98% probability of a rate hike of 25 basis points in February, to 4.5-4.75% per year.

In December 2022, the ECB raised its benchmark interest rate by 50 basis points to 2.5% from 2% per year. In addition, representatives of the central bank said they believe a further rate hike is necessary in order to achieve the 2% inflation target.

At its latest meeting, the BoE raised its benchmark interest rate by 50 basis points to 3.5% from 3%. It was raised by the results of the ninth meeting and reached its highest mark in 14 years. In addition, representatives of the British central bank declared their intention to adhere to the tactics of further rate hikes to combat the record level of inflation and recession in the economy.

Another factor supporting the European stock market was the strong performance of the U.S. stock exchanges in trading the day before. On Thursday, amid positive data about the US GDP, the Dow Jones Industrial Average index grew by 0.61%, S&P 500 gained 1.1% and NASDAQ Composite gained 1.76%.

European investors were also analyzing new macro data. Consumer confidence in the French economy fell to 80 points in January, its lowest level since September 2022. At the same time, experts on average expected growth to 83 points. This indicator was 81 points in December 2022.

Meanwhile, according to preliminary official data, the economy of Spain increased by 0.2% in quarterly terms following the results of the fourth quarter. Analysts on average expected growth in gross domestic product of the country by 0.1%.

Previous trading results

On Thursday, the leading stock exchange indices of Western Europe closed in the green zone due to the U.S. GDP report.

The STOXX Europe 600 rose by 0.42% to 453.98 points.

French CAC 40 gained 0.74%, German DAX gained 0.34% and British FTSE 100 gained 0.16%.

Swedish auto concern Volvo Group lost 1.8% on the report of the company's management about the 17% lower net profit in the past quarter - down to $648.5 million. At the same time, Volvo's results in 2022 were not so bad, and the net profit of the concern decreased only to $3.2 billion.

Finnish telecommunications equipment maker Nokia, Corp. is up 4%. The company said that its quarterly revenue in October-December 2022 will increase 16% to 7.45 billion euros. In 2023, the company expects revenues of €24.9 billion to €26.5 billion.

Shares of STMicroelectronics, a European developer of semiconductor electronic and microelectronic components, soared 8.2%. In the last quarter, the company increased its net profit by 24% year-on-year to $4.4 billion. The final figure significantly exceeded analysts' forecasts.

Spanish bank Sabadell rose 11% on strong quarterly reports.

Shares of British manufacturer of premium alcoholic beverages Diageo Plc fell by 5.5%. The company reported stronger net income and higher revenues in the first half of fiscal 2023 on the back of stronger sales and prices for its products.

Wizz Air Holdings PLC, a Hungarian low-cost airline, rose 2.3%. The low-cost carrier's management reported a pre-tax profit of €36.4 million for the fourth quarter of 2022, compared to a loss of €266.1 million for the fourth quarter of 2021. Meanwhile, Wizz Air's revenue more than doubled to 911.7 million euros.

Shares of German manufacturer of software for organizations SAP SE fell by 0.9%, despite the fact that the company increased its operating profit and revenues in the last quarter.

Russian mining company Polymetal International Plc collapsed by 20.4%.

Irina Maksimova,
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