Equity markets in Western Europe fell sharply during trading on Wednesday, following the dynamics of the main stock indexes in the Asia-Pacific region.
The composite index of the largest companies in the Stoxx Europe 600 region fell by 1.69% by 12:30 pm to 381.66 points.
The British stock index FTSE 100 is down 1.57%, the German DAX – 1.6%, the French CAC 40 – 1.24%. Italian FTSE MIB loses 1.56%, Spanish IBEX 35 – 1.78%.
Asian stocks also fell heavily, with Hong Kong’s Hang Seng hitting a 13-year low.
Investors are still worried about forecasts of a global economic recession amid persistently high inflation and aggressive measures by the largest central banks to contain it.
The European Central Bank (ECB) will raise interest rates at the next few meetings, the head of the regulator, Christine Lagarde, said at an event in Frankfurt on Wednesday.
“We will do what we must, which is to keep raising interest rates at the next meetings,” Lagarde said. “Our main goal is price stability, and we must achieve it. If we do not achieve, then the economy will suffer even more.”
In early September, the ECB raised all three key interest rates by 75 basis points (bp) for the second time in a row. The base interest rate on loans was raised to 1.25% per annum, the rate on deposits – up to 0.75%, the rate on margin loans – up to 1.5%. Markets expect the European Central Bank to raise rates by another 75 bp in October.
Meanwhile, the leading indicator of consumer confidence in Germany, calculated by the research company GfK, updated a historical low in October. The value of the indicator fell to minus 42.5 points compared to minus 36.8 points in September. A record low is recorded following the results of the fourth month in a row.
Analysts on average predicted a less significant drop – to minus 39 points, according to Trading Economics.
The consumer confidence index in France in September fell to 79 points compared to 82 points a month earlier, data from the national statistical office Insee showed. As a result, its value coincided with the historical minimum, which was recorded in May 2013 and in July this year.
Experts on average expected a reduction of only 80 points.
German industrial group Thyssenkrupp AG plunged 12.1% to become one of the top three Stoxx 600 stocks. JPMorgan analysts affirmed the company’s underweight rating.
The shares of Norwegian fish companies SalMar ASA (-27.5%) and Mowi ASA (-19.2%) also fell most significantly.
Dutch supermarket operator Royal Ahold Delhaize NV is down 0.6%. The company’s Board of Directors intends to propose to shareholders that they reappoint CEO and Chairman of the Board Frans Müller for another term.
The capitalization of the British fashion house Burberry Group Plc is growing by 3.4%. The company’s chief creative officer, Riccardo Tisci, will retire at the end of September. He will be replaced by Daniel Lee.
Asia-Pacific region, DYNAMICS, European stock markets, Stock indices
Stock indices of Western European countries are rising during trading on Monday.
The composite index of the largest companies in the region Stoxx Europe 600 by 12:19 Moscow time increased by 0.96% and amounted to 424.39 points.
The German DAX rose 1.7%, the French CAC 40 rose 1.32%, and the British FTSE 100 also rose 1.32%. The Italian FTSE MIB and the Spanish IBEX 35 gained 1.91% and 1.29% respectively.
The focus of traders this week is US inflation data for August, which will be carefully assessed by the Federal Reserve System (Fed) during the September meeting. The indicator will be published by the US Department of Labor on Tuesday at 15:30 Moscow time.
Experts, however, consider it unlikely that even in the event of a weakening of August inflation, the Fed will refuse another rate hike by 75 basis points (bp) in September, Bloomberg notes. Last week, US Central Bank Governor Jerome Powell reaffirmed the Fed’s readiness to “act decisively” to slow down US consumer price growth.
Meanwhile, the European Central Bank (ECB) raised all three key interest rates by 75 bps last week. and stated that he intended to continue to increase them in the next few meetings.
The volume of industrial production in the UK in July unexpectedly fell by 0.3% compared with the previous month, official statistics showed. A month earlier, the figure fell by 0.9%. Analysts had expected it to rise 0.4% in July, according to Trading Economics.
UK exports in July 2022 were down 4.2% from the previous month to £61.05 billion, according to data from the National Statistics Office (ONS). Imports fell 1.6% to £68.84 billion.
The UK foreign trade deficit narrowed to £7.8bn in July from £11.4bn a month earlier. This is the lowest figure since last December.
Shares of Deutsche Lufthansa AG rise in price by 2.6%. The German airline has entered into an agreement with the trade union Vereinigung Cockpit to raise the salaries of pilots.
Electrolux AB drops 0.6%. The Swedish company, one of the world’s largest home appliance manufacturers, is launching a cost-cutting program amid weaker-than-expected market demand and underwhelming third-quarter results.
Among the growth leaders among the components of the Stoxx Europe 600 indicator are shares of the German energy company Uniper SE, which are rising in price by 7.1%.
The stock indices of most of the leading economies in Western Europe ended with moderate growth trading on Tuesday.
The composite index of the largest companies in the region Stoxx Europe 600 increased by 0.24% and amounted to 414.38 points.
The German DAX indicator increased by 0.87%, the French CAC 40 – by 0.19%, the British FTSE 100 – by 0.18%. The Italian FTSE MIB added less than 0.01%, while the Spanish IBEX 35 lost 0.26%.
This week, the most important event for traders will be the meeting of the European Central Bank (ECB), which will be held on Thursday. At a meeting in July, the European Central Bank raised rates for the first time in 11 years, by 50 bp at once. The market as a whole expects that at the forthcoming meeting the rise could be 75 bp at once.
Meanwhile, on Tuesday it became known that the volume of orders of industrial enterprises in Germany in July fell by 1.1% compared with the previous month. Analysts on average expected a decline of 0.5%, according to data from Trading Economics. In June, according to revised data, the indicator fell by 0.3%, and not by 0.4%, as previously reported.
Shares of Volkswagen AG rose 3.7%. The German carmaker has confirmed its intention to list the shares of luxury sports car manufacturer Porsche AG. The IPO could be the largest in German history and the largest in Europe since 1999, according to Refinitiv data.
Deutsche Lufthansa AG added 1.5%. The German airline will continue negotiations with the pilots’ union to avoid a strike that would lead to the cancellation of numerous flights.
Finnair Oyj’s share price rose 1.1%, although the Finnish carrier reduced the number of passengers carried in August by 12% compared to the previous month.
Among the gainers among the components of the Stoxx Europe 600 index were shares of the German food delivery service Delivery Hero SE, which added 7.7%.
Energy companies led the decline, including Equinor (-6.7%), Orron Energy (-6.3%) and Uniper SE (-5.7%).
Stock indices of the largest Western European countries started the week with a negative mood amid a surge in natural gas prices after the shutdown of the Nord Stream 1 gas pipeline, MarketWatch writes.
The composite index of the largest enterprises in the Stoxx Europe 600 region decreased by 1.4% by 12:08 Moscow time and amounted to 410.07 points.
The German DAX indicator fell 2.7% from the market opening, the British FTSE 100 – 0.9%, the French CAC 40 – 2%. Italian FTSE MIB lost 2.4%, Spanish IBEX 35 lost 1.8%.
Among the leaders of the decline in quotations are shares of chemical companies and manufacturers of cars and spare parts for them, including the French Faurecia (-6.1%) and Valeo (-7.5%), as well as the German Faurecia (-4.7%).
The price of shares of the German electricity producer Uniper SE collapsed by more than 10%.
The Swiss UBS Group AG refused to buy the American Wealthfront for $1.4 billion. The companies said they made this decision together, but did not give reasons. UBS shares are down 1.7%.
ArcelorMittal SA, one of the world’s largest steel producers, announced its intention to close two plants in Germany due to a sharp increase in electricity prices, as well as to stop the operation of an enterprise in Spain. The cost of the company’s papers fell by 3.7% at auction in Amsterdam.
British developers Countryside Partnerships Plc and Vistry Group Plc have agreed to merge. Vistry will pay £0.6 and 0.255 new shares for the competitor. Based on closing quotes on Friday, the total payout will be £2.49. Overall, Vistry valued the competitor at around £1.25bn ($1.44bn).
Countryside’s shares jumped more than 6% in early trading, while Vistry’s shares fell 0.3%.
Business activity in the service sector in Germany fell in August for the second month in a row, according to the Purchasing Managers’ Index (PMI), calculated by S&P Global. The indicator fell to 47.7 points compared to 49.7 points a month earlier.
The value of the index below 50 points indicates a weakening of activity in the sector.
Consolidated PMI fell to 46.9 points from 48.1 points in July.
Meanwhile, in the Eurozone as a whole, PMI of the services sector decreased in August to 49.8 points against 51.2 points a month earlier. The index fell below the 50 mark for the first time since March 2021.
Consolidated PMI in the euro area fell to 48.9 points from 49.9 points in July.
Retail sales in the euro area in July increased by 0.3% compared to the previous month, the European Union’s statistics office said. Analysts were expecting a 0.4% rise on average, according to Trading Economics. According to the revised data, in June the indicator fell by 1%, and not by 1.2%, as previously announced.
Stock indices of the largest countries of Western Europe are falling during the first trading session of autumn.
The composite index of the largest companies in the region Stoxx Europe 600 by 11:10 Moscow time decreased by 1% and amounted to 410.88 points.
The German DAX index falls by 1%, the French САС 40 – by 1.2%, the British FTSE 100 – by 0.9%. The Italian FTSE MIB and the Spanish IBEX 35 are down 0.9% and 0.7% respectively.
Traders in the region are considering the prospect of strong ECB rate hikes at the last two regulator meetings this year. On Wednesday, after the release of data on August inflation in the euro area, which broke a historical record, analysts published forecasts for the European Central Bank to raise rates by 75 bp at the September meeting, and by 50 bp at the October meeting.
At a meeting in July, the ECB raised rates for the first time in 11 years, by 50 bp at once. The base interest rate on loans was raised to 0.5%, the rate on deposits – to zero, the rate on margin loans – to 0.75%.
Retail sales in Germany rose unexpectedly by 1.9% in July compared to the previous month, data from the country’s Federal Statistical Agency (Destatis) showed. The rate of increase in the indicator became the highest since June 2021. Analysts polled by Trading Economics did not expect the index to change.
France’s Pernod Ricard SA, one of the world’s largest spirits producers, is down 1% despite the fact that the company increased its revenue by 21% in fiscal 2022 and raised its dividend by 32%, to 4.12 euros per share.
Shares of mining Rio Tinto PLC fell 2.6% at auction in London. The company has agreed to buy out a 49% stake in Canadian Turquoise Hill Resources Ltd. for $3.3 billion.
Papers of the British Reckitt Benckiser Group PLC, which produces hundreds of household chemicals and medicines, lose 4.7% in price. The company’s CEO, Laxman Narasimhan, will step down on September 30. The interim acting CEO will be Nicandro Durante, Senior Independent Director of the Supervisory Board.
The market capitalization of the Swedish investment company EQT AB falls by 3.3%. The company has set the size of the EQT Infrastructure VI fund, which aims to invest in infrastructure projects, in the amount of 20 billion euros.
The drop leaders among the components of the Stoxx Europe 600 are shares of Germany’s real estate alstria office REIT-AG, which shed 14.2%.
Stock indices of the largest countries of Western Europe are growing at the auctions on Tuesday, winning back the fall the day before.
The composite index of the largest companies in the region Stoxx Europe 600 by 11:20 pm increased by 0.87% and amounted to 426.32 points.
The German DAX index rises by 1.4%, the French CAC 40 – by 1.2%, the British FTSE 100 – by 0.6%. The Italian FTSE MIB and the Spanish IBEX 35 are up 1.5% and 1% respectively.
Consumer prices in Spain, harmonized with EU standards, increased by 10.3% in annual terms in August, preliminary data from the Spanish statistical office INE showed. Inflation slowed down from 10.7% in July and was below the 10.4% forecast by analysts polled by The Wall Street Journal.
The slowdown in consumer prices is associated with a slowdown in the rise in energy prices, the INE report notes.
On a monthly basis, consumer prices in the country rose by 0.1% in August. In the previous month, prices decreased by 0.6% compared to June.
Among the growth leaders in the Stoxx 600 are the shares of the Norwegian IT company Adevinta ASA (+13.8%), the Danish manufacturer of diagnostic equipment Ambu A/S (+7%), the British footwear manufacturer Dr. Martens PLC (+5%) and French digital Atos SE (+4.7%).
The drop leaders in Europe are shares of mining and energy companies, including Polymetal International PLC (-3%), Orron Energy AB (-2.8%), Dino Polska S.A. (-2.3%), Equinor ASA (-2%), Antofagasta PLC (-1.9%) and BHP Group Ltd. (-1.8%).
