07.08.202204:49 Analisis Forex & Kajian: European stock market closes the week with a fall

The key exchange indicators of Western Europe showed a decline on Friday amid weak financial statements of large European companies. In addition, investors were anxiously awaiting fresh key data on the United States labor market.

Exchange Rates 07.08.2022 analysis

So, by the time of writing, the aggregate indicator of the leading companies in Europe, the STOXX Europe 600, had sunk by 0.26% to 437.94 points.

The French CAC 40 dropped 0.49%, the German DAX lost 0.15%, and the British FTSE 100 declined 0.14%.

Leaders of Growth and Decline

The value of securities of the German insurance company Allianz fell by 2.7%. In the second quarter of fiscal year 2022, the net profit of one of the largest insurers in Europe decreased by 23% amid market instability. Despite this, the company reported an increase in operating profit.

The share price of the British advertising holding company WPP fell by 7.5%. At the same time, in January-June, one of the key players in the global advertising market increased operating profit by 11%, and revenue by 10%. In addition, the company's management has improved the forecast until the end of 2022.

The market capitalization of the German postal and logistics company Deutsche Post DHL Group soared by 5.9% on the back of revenue growth in the second quarter by 23% year-on-year. The company's final results significantly exceeded analysts' preliminary forecasts.

The securities of the French company specializing in the development and publication of computer games Ubisoft Entertainment SA rose 0.3%. A day before Chinese IT holding Tencent Holdings said that it is considering increasing its stake in the French developer of computer games.

Shares of the stock exchange and financial information company London Stock Exchange Group PLC jumped 4.1%. In the first half of the year, LSE significantly increased its pre-tax profit and announced the launch of a securities repurchase program worth up to $911.9 million.

The market value of the Italian tire manufacturer Pirelli & C SpA plunged by 3.4%, despite the fact that in January-June the company increased its net profit by 1.8 times.

What is Happening in the Market Right Now?

The key catalyst for the rise of the German DAX stock index on Friday was strong macro statistics for Germany. Thus, according to the information of the Federal State Administration of the state, in June industrial production in the country unexpectedly increased by 0.4% compared to May. At the same time, the market expected the indicator to fall by 0.3%.

In addition, the participants of the European stock market were discussing the results of the Bank of England's August meeting, which ended the day before. On Thursday, representatives of the central bank warned about the prospects of the UK economy entering a long period of recession in the fourth quarter of 2022. In addition, the BoE raised the key interest rate by 50 basis points to 1.75% from 1.25% per annum as part of the fight against record inflation. The August rate increase by the central bank turned out to be the sixth in a row, and the rate of its increase became a record since 1995.

On Friday evening, the US Department of Labor was set to publish a report on the unemployment rate in the country for July. According to preliminary scenarios of analysts, this indicator remained at the same level of 3.6% last month, while the number of jobs in the United States (excluding the agricultural sector) increased by 250,000 after a June increase of 372,000.

Trading Results on the Eve

Last Thursday, European stock exchange indicators showed an increase amid strong financial statements of euro region companies. In addition, the day before, investors evaluated the BoE's decision and the latest statistics of the eurozone.

As a result, the aggregate indicator of the leading companies in Europe STOXX Europe 600 increased by 0.18% to 439.06 points.

The British FTSE 100 gained 0.03%, the French CAC 40 increased by 0.64%, and the German DAX rose by 0.55%.

The value of securities of the German carrier Deutsche Lufthansa AG soared by 6.4% on the back of the company's return to net profit of 259 million euros after a loss of 756 million euros a year earlier in April-June, as well as due to an optimistic annual forecast. At the same time, Lufthansa management warned that in the next quarter it will be able to perform only about 80% of pre-crisis passenger traffic due to a shortage of airport and airline personnel.

The quotes of the French bank Credit Agricole rose by 4.7%. On Thursday, the company reported revenue growth for April-June by 8.8% year-on-year amid high activity of the investment banking division. The French lender's net profit also increased and significantly exceeded market expectations.

The market capitalization of the Swiss commodity trader Glencore rose by 3.1%. In the first half of fiscal year 2022, the company increased its net profit by almost nine times in annual terms, and revenue by 43%.

The share price of the German manufacturer of sporting goods and clothing Adidas rose by 2.5%, despite the fact that in the second quarter of the 2022 fiscal year, the company's net profit sank by 26%. At the same time, Adidas revenue increased by 10.2% despite the damage caused by the suspension of business in Russia.

The value of securities of the German pharmaceutical concern Bayer AG collapsed by 2.5%, despite the fact that in the second quarter the company reduced its net loss and increased revenue.

The market capitalization of the German online retailer Zalando soared by 13.1%. The company confirmed its annual forecast despite a decrease in net profit in the past quarter.

Irina Maksimova,
Pakar analisis InstaForex
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