23.11.2022 11:42 PM
European stocks rise after surging to previous day's highs

Western Europe's leading stock indicators were mostly positive on Wednesday soon after the release of strong data on the eurozone. In addition, investors are looking forward to the results of the US Federal Reserve's November meeting, which will take place in the evening.

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The composite indicator of the leading European companies STOXX Europe 600 increased by 0.2% - to 437.10 points.

The French CAC 40 rose by 0.08%, the British FTSE 100 rose by 0.4% to a two-month high, while the German DAX dropped by 0.03%.

Rise and fall

Shares of the Swiss bank Credit Suisse Group AG fell by 5.2%. On Wednesday, the lender announced it expects a pre-tax loss of up to $1.6 billion in its fourth quarter.

British chemical company Johnson Matthey dropped by 7.2% after its management reported a drop in net profit in the first fiscal half of the year.

The share price of Prosus NV, a Dutch global investment group, increased by 1.4%. Revenue in the first half of the year climbed by 9% to $16.5 billion.

United Utilities Group PLC, a British water supplies company, rose 0.1% amid a report that pre-tax profits doubled in the first fiscal half of the year.

The share price of the German motor vehicle manufacturer Volkswagen AG ended lower by about 1.3%. The day before, the company's management said it had agreed to a new pay deal with Germany's largest labor union, IG Metall, to increase employees' salaries and pay bonuses of 3,000 euros.

UK pet retailer Pets at Home fell 3.1% amid a decline in half-year profits due to a sharp rise in logistics and energy costs, as well as record inflation in the country.

Market sentiment

European investors are analyzing new data for the region on Wednesday. Thus, according to the preliminary 'flash' reading from S&P Global, the Eurozone PMI Composite Output Index rose to 47.8 points in November from October's 47.3 points. At the same time analysts expected the index to fall to 47 points.

Traditionally, a composite index below 50 points signals a decline in business activity in the industrial and services sector. By the way, in the euro area, the index remains below this mark for the fifth consecutive month.

Meanwhile, Germany's composite PMI rose to 46.4 points in November from October's 45.1 points, the highest since August 2022.

In France, this month's composite PMI fell to 48.8 points from 50.2 points in October. The fall of the index in the country was recorded for the first time since March last year.

An important factor that supported the European stock exchanges on Wednesday was the strong results of the last trading session on the US stock market. On Tuesday, the Dow Jones Industrial Average gained 1.18%, jumping to a three-month high; the S&P 500 was up 1.36%; and the NASDAQ Composite was up 1.36%.

World markets were eagerly waiting for the release of the minutes of the US Federal Reserve's November meeting in order to get a general idea about the state of the American economy.

Let me refresh your memory, following its October meeting, the central bank raised the interest rate by 75 basis points. At the same time, Fed officials also mentioned the prospects of reducing the rate hike during the November and December meetings.

Trading results on Tuesday

Western Europe's leading stock market indicators closed Tuesday in the green zone, hitting several months' highs.

As a result, the STOXX Europe 600 composite index of Europe's leading companies rose 0.73% to 436.22 points, a three-month high.

France's CAC 40 rose 0.35% to a seven-month high, Britain's FTSE 100 rose 1.03% to a peak in more than two months, and Germany's DAX gained 0.29% to its highest level in June.

The British-Dutch oil and gas giant Shell rose 4.8% on the back of a sharp increase in global prices for oil.

Meanwhile, the share price of British oil and gas company British Petroleum soared by 6.5% after analysts of the international financial conglomerate Citigroup raised the rating of BP securities from "neutral" to "buy.

The market capitalization of Italy's largest utility group, Enel, jumped 0.5% on news that it was planning asset sales worth 21 billion euros to reduce its net debt.

Prosus, a major investor in consumer internet companies, collapsed by 3.8%. The company's management said that it expects profit for the six months to September 20 to have dropped by at least 79.9% from the same period last year.

The value of securities of the British pharmaceutical company GSK Plc sank by 0.8%.

Quotes of French oil producer TotalEnergies soared 4.4% after Saudi Arabia denied that it was discussing oil output hike with other producers.

The market capitalization of the British online electronics retailer AO World increased by 16.8%. On Tuesday, the company published an optimistic annual profit outlook and reported an increase in pre-tax losses in the first half of fiscal year 2023, which ended on September 30.

Health care company Fresenius shares rose 1.4% on news of two tranches of bonds totaling €1 billion.

Irish construction materials supplier CRH shares sank 1.3% despite the fact that the company increased its revenues by 13% in January-September and confirmed its EBITDA forecast at $5.5 billion by the end of the year.

On Tuesday, European investors were closely following the news about the alarming epidemiological situation in China.

Local media reported on new outbreaks of COVID-19 in the country. Thus, three deaths from the effects of the coronavirus were recorded in Beijing.

In an attempt to contain the spread of infection, Guangzhou authorities have closed the city's largest district of Baiyun. By the end of the week, public transportation will cease to function in the area, universities will be closed, and local schools will switch to online learning.

Additional and ongoing restrictive measures in China, affecting millions of people in multiple cities, are negatively affecting the country's economic activity.

Irina Maksimova,
Especialista em análise na InstaForex
© 2007-2023
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