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Friday, January 27, 2023

European stocks silenced amid corporate earnings, German economic data

By Scott Kanowsky

Investing.com — European equities weakened on Wednesday as investors pondered new corporate earnings and watched for the upcoming release of new economic data from Germany.

At 03:45 ET (0845 GMT), the pan-European was down 0.13%, Germany’s traded 0.04% lower, the UK’s gained 0.16%, while France increased by 0.06%.

Asian stocks provided a strong pass-through to Europe, with shares in the region jumping to their highest levels in seven months as many markets reopened after the Lunar New Year holiday. However, volumes remained low, with key markets in China and Taiwan still closed.

Global stock markets have performed stronger so far this year compared to a rollercoaster ride in 2022. Many traders expect the US to decline.

Federal Reserve

will slow its recent monetary policy tightening cycle following signs of a possible inflation spike, while optimism has also been boosted by the sudden lifting of COVID-19 restrictions in China.

In a note to clients, ING analysts said more information on the outlook for Europe’s largest economy, Germany, will be provided with the January release. Economists expect the reading to improve slightly compared to December.

“[T]The most notable releases from the G-7 have been a slew of PMI numbers from Europe, which painted a slightly less gloomy picture of the economy than it has for some time, with the composite PMI just picking its way back above boom level. /fall from the 50 threshold, ING analysts said, referring to several surveys of business activity released on Tuesday.

In corporate news, Dutch semiconductor provider ASML Holding NV (AS:) forecast first-quarter gross margin to be between 49% and 50%, below estimates. Shares of the Amsterdam-listed company fell in early trading.

European software firms including Germany-based SAP SE (ETR:) also fell after US peer Microsoft (NASDAQ:) warned of slowing sales in its latest report.

Budget airline EasyJet PLC (LON:) saw shares soar to their highest since June after it posted a first quarter well above consensus estimates and said it expects to return to full-year profit after three years. of losses caused by the pandemic.

renault SA (EPA:) shares also rose after AlphaValue/Baader analysts upgraded their rating of the French automaker to buy from hold, saying the company’s near-term performance will benefit from structural improvements.

The extent of the recovery in demand from China, as well as the possibility of the OPEC+ oil group keeping production unchanged at its meeting next week, were key topics in energy markets. At 03:45 ET, futures were trading 0.19% lower at $79.98 a barrel and the contract was down 0.06% at $86.08 a barrel.

Furthermore, it was down 0.20% to $1,931.60/oz, while it was largely unchanged at $1.0884.

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