The key stock indicators of Western Europe showed growth on Monday. Market participants analyze the latest data on business activity in the eurozone and discuss a new batch of corporate reports from the largest companies in the region.
So, by the time of writing, the aggregate indicator of the leading companies in Europe, the STOXX Europe 600, increased by 0.18% to 439.07 points.
According to the results of the past month, this indicator soared by 7.7% – the highest rate in more than a year and a half.
The best results among the components of the STOXX 600 on Monday show securities of the British management company Quilter Plc (+12.6%), the Swedish oil and gas company Orron Energy AB (+9%) and the German manufacturer of military equipment Rheinmetall AG (+6%).
Meanwhile, the British FTSE 100 gained 0.21%, the French CAC 40 increased by 0.28%, and the German DAX rose by 0.24%.
At the end of July, European stock indexes recorded the best dynamics since November 2020 and increased by 3.5%, 8.9% and 5.5%, respectively.
Growth and Fall Leaders
The value of securities of the British multinational publishing and educational company Pearson PLC soared by more than 6%. Earlier, the company reported a profit that exceeded market expectations in the first half of the year.
The quotes of the Dutch brewing company Heineken decreased by 2.3%, despite the fact that in the first half of the year its net profit increased by 22% and revenue by 37%.
The market capitalization of the British bank HSBC Holdings Plc increased by more than 6% amid the release of reports for the second quarter of the 2022 financial year. The largest bank in the region increased its net profit by 62% and promised to resume quarterly dividend payments in 2023.
The share prices of the Austrian banking group Erste Group Bank AG plunged by 0.3%, despite the report on a tangible increase in net profit in the first half of the year amid an increase in interest rates.
The value of securities of the German software developer SAP SE rose by 0.6%. The day before, the company announced the launch of a share repurchase worth 500 million euros.
What is Happening in the Market Right Now?
Participants of the European stock market were focused on a new portion of financial statements from leading companies in the region.
In addition, investors are analyzing key macro statistics data in the eurozone. Thus, at the end of July, the business activity index (PMI) in industrial production of 19 countries of the euro region amounted to 49.8 points. At the same time, analysts predicted 49.6 points.
The German industrial PMI also turned out to be higher than the preliminary scenarios – 49.3 points against the expected 49.2 points.
The volume of retail sales in Germany in June fell by 8.8% year-on-year, and on a monthly basis - by 1.6%. At the same time, the annual decline was the highest since the beginning of the collection of data on retail sales in the country in 1994. By the way, the market on average expected an increase of 0.2%.
According to the Italian statistical agency IStat, the June unemployment rate in the country fell to 8.1% from 8.2% in May. The final figure coincided with analysts' forecasts.
Last month, manufacturing activity in the eurozone declined: the index of business activity in the manufacturing industry of the region sank to 49.8 compared to June's 52.1.
Previous Trading Results
Last Friday, European stock exchange indicators showed an increase amid strong financial statements of euro region companies and macro statistics.
As a result, the aggregate indicator of the leading companies in Europe, the STOXX Europe 600, increased by 1.3% to 438.29 points.
The British FTSE 100 increased by 1.06%, the French CAC 40 soared by 1.72%, and the German DAX rose by 1.52%.
The value of the securities of the French automotive group Renault jumped by 5.1%, despite the fact that the day before the company reported a net loss of $1.39 billion in the first half of the year. At the same time, Renault management has raised its operating profitability forecast for the entire current year.
The quotes of the British bank Standard Chartered PLC rose by 1.7% after the company reported an increase in pre-tax profit by 7% in the first half of the year. By the way, the final financial result of Standard Chartered PLC significantly exceeded market expectations. In addition, the bank's management announced a new securities repurchase program worth $500 million and gave an optimistic forecast until the end of the year.
The value of Air France-KLM shares increased by 4.4%. In the second quarter, the airline increased revenue by almost two and a half times, but lowered its capacity forecast for the third quarter.
The share price of the Italian oil and gas company Eni increased by 5.6%. In April-June, the company's net profit soared more than 15 times due to the increase in oil and gas prices.
The market capitalization of the French bank BNP Paribas SA increased by 5%. The day before, the company reported an increase in net profit by 9%, and revenue by 8.5% in the second quarter.
The securities of the French luxury goods manufacturer Hermes rose by 7.5% on the announcement of an increase in sales following the results of the past quarter.
Shares of the French energy company Engie rose by 0.12%. In the first half of 2022, the company's net profit more than doubled.
Investors analyzed key data on economic growth in the eurozone. Eurostat reported that in the outgoing month, the annual inflation rate in the euro region had updated to a historical high, accelerating to 8.9%.
In the second quarter of 2022, the French economy grew by 0.5% in quarterly terms. At the same time, the market predicted an increase of only 0.2%. The main reason for the unexpected rise of the economy in the past quarter was foreign trade. Thus, the volume of exports increased by 0.8%, while imports decreased by 0.6%.
The level of consumer spending in France unexpectedly rose by 0.2% in June compared to May. At the same time, analysts expected it to decrease by 0.6%.
Consumer prices in the country soared in the past month by 6.8% in annual terms, which became a record in the history of calculating the indicator.
Meanwhile, in the second quarter of 2022, German GDP growth adjusted for the number of working days amounted to 1.4% in annual terms.
The Italian economy in April-June rose by 1% compared to the first quarter and by 4.6% in annual terms. Analysts surveyed earlier predicted GDP growth of 0.1% in quarterly terms and 3.7% in annual terms.