On Thursday, key European stock indices rose. Stock market participants are anxiously awaiting the publication of the ECB September's meeting outcome on monetary policy. Today, the positive previous closing of trading on the US stock market became an additional catalyst for growth in European indices.
By the time of writing, the STOXX Europe 600 index of Europe's leading companies increased by 0.14% to 412.60 points.
Meanwhile, the French CAC 40 gained 0.21%, the German DAX added 0.2%, and the British FTSE 100 rose by 0.34%.
Top gainers and losers
Shares of British animal genetic breeding company Genus Plc soared by more than 13% on revenue growth data in last fiscal year.
Stocks of French IT company Atos SE were down nearly 15%.
The market capitalization of British cybersecurity systems developer Darktrace plummeted by 31%. On Thursday, the company reported a return to pre-tax profits for the current fiscal year and nearly doubled its revenue. At the same time, Darktrace management also confirmed the end of talks with US investment firm Thoma Bravo about the possible sale of Darktrace.
The shares of British supplier of jet engines and auto parts Melrose Industries PLC, sank by 2.3%. The day before, the engineering company announced that pre-tax losses in the past financial half-year were increased to 358 million pounds from 275 million pounds recorded a year earlier. Moreover, the day before international business newspaper Financial Times reported that Melrose Industries PLC planned to spin off its car division GKN in a new company registered in the UK.
The stocks of the British chain of restaurants and pubs Restaurant Group PLC rose by 2.1%. In January-June, Restaurant Group noticeably reduced its pre-tax loss due to strong revenue growth.
Shares of UK food processor and retailer Associated British Foods PLC were down 7.1%. The retailer projected a 40% increase in sales for the fiscal year ending September 17. At the same time, the company's management warned of a possible decline in adjusted profits next fiscal year amid rising energy prices and a stronger US dollar.
The market capitalization of Finnish paper product manufacturer Stora Enso added 2.8% on news about its purchase of Dutch carton manufacturer De Jong Packaging Group. The deal is worth 1.02 billion euros.
The shares of French retailer Carrefour rose by 2%.
The stocks of French financial conglomerate Societe Generale advanced by 1.4%.
Shares of Dutch manufacturer of medical equipment Koninklijke Philips NV declined by 0.2%. Earlier, the French media reported that the Paris prosecutor's office had launched an investigation into respiratory devices recall of the Dutch company.
Current market sentiment
On Thursday, European investors were focused on the upcoming publication of the European Central Bank's September meeting outcome. During the meeting, the governing council of the regulator is expected to decide on a second sharp interest rate hike to prevent further deterioration of economic conditions.
However, some market experts believe a rate increase by only 50 basis points is more likely, while others think the rate will be raised by 75 basis points. Pessimistic analysts outline such major arguments as record inflation, permanent reduction of Russian gas supply, and rising energy prices. In case the interest rate is increased by 75 basis points, this hike will be the largest in history.
Notably, during a meeting in July the Central Bank increased the prime rate by 50 basis points for the first time since 2011.
On Thursday, strong positive dynamics of Wall Street the day before became a significant upward factor for European stock indices. On Wednesday, the Dow Jones Industrial Average closed the trading session with a 1.4% increase, breaking a seven-day sequence of permanent decline.
Previous trading results
On Wednesday, European stock indices traded mixed after a significant growth the day before. Negative investor sentiment was caused by a frightening prospect of a crisis in the energy markets amid a permanent increase in gas prices. Moreover, stock market participants still worry that the eurozone economy may enter a recession due to continuing skyrocketing inflation.
Consequently, the STOXX Europe 600 index of Europe's leading companies fell by 0.57% to 412.01 points.
The French CAC 40 rose by 0.02%, the German DAX gained 0.35%, and the British FTSE 100 sank by 0.86%. The dramatic decline of FTSE 100 occurred amid a sharp drop in global oil prices.
The shares of Spanish energy company Repsol S.A. fell by 1.9%. Earlier, the media had published the news that the company was selling 25% of its oil and gas exploration and production business to investment US firm EIG Global Energy Partners. The amount of the deal is estimated at $4.8 billion.
The stocks of Finnish air carrier Finnair Oyj rose by 0.4%. The day before, the company announced a new strategy to combat profitability problems by cutting costs and reducing the number of its crew.
The market capitalization of Ubisoft Entertainment S.A., a French company specializing in the development of computer games, collapsed by 17.2%. The news that Chinese private investment company Tencent Holdings Ltd. bought a minority stake in the holding company which controls the publisher of the famous Assassin's Creed series of video games became the key reason for decline in its shares. Ubisoft Entertainment executives said that Tencent Holdings Ltd. purchased a 49.9% stake in Guillemot Brothers Ltd, the holding company of the Guillemot family who founded Ubisoft in 1986.
German electricity producer Uniper's stocks were down 6.3%. Germany's largest gas importer has been hard hit due to the Kremlin's decision to cut supplies of raw materials to Europe.
Shares of German supplier of equipment for the energy industry Siemens Energy AG declined by 5.9%. Previously, Gazprom blamed Siemens for its inability to repair faults on its Trent 60 gas compressor unit and for halting exports of Russian gas to the EU countries.
The market capitalization of British bank Standard Chartered dropped by 4.3%.
The shares of British food processor and retailer Associated British Foods PLC decreased by 3.6%.
The stocks of French spirits producer Remy Cointreau rose by 0.9% after launching a buyback program of up to 1 million of its own shares.
On Wednesday, European investors discussed the permanently worsening crisis on the global energy markets. Since the start of the week, gas prices have been under pressure due to disruptions in supply chains from Russia to Europe.
In late August, global gas prices soared above $3,500 per 1,000 cubic meters, hitting new historical records several times. The reason for this dramatic rise was Gazprom's announcement that one of major gas pipelines to Europe Nord Stream would shut down for three days to perform maintenance.
However, the scheduled maintenance work did not end. Meanwhile, Russia canceled the deadline for resuming gas supplies through the pipeline. Gazprom attributed this fact to malfunctions on the Trent 60 gas compressor unit due to oil leak.
The Nord Stream pipeline has been operating at only 20% of its capacity lately and its recent shutdown has raised fears about Europe's energy supply ahead of winter.
Experts believe that permanently rising energy prices will further fuel inflation in the eurozone, which is already rapidly approaching double digits.
On Wednesday, European investors focused on Germany's statistics. According to the Federal Statistical Office, the volume of industrial production in Germany reduced by 0.3% month-on-month in July as compared to June.
Moreover, experts awaited a 0.5% decline in July. According to the revised data, the volume of industrial production in Germany grew by 0.4% in June. A significant growth of industrial production in the country is still limited by high shortages of raw materials and disruptions in supply chains. At the same time, the school vacations in Germany started late in 2022. It means that the traditional summer production decline was smaller than expected.
Additional eurozone data were released Wednesday evening. Eurostat raised its estimate of euro area gross domestic product (GDP) growth for April-June to 4.1% year-on-year from 3.9%. In quarterly terms, the figure increased by 0.8%, not by 0.6% as previously forecasted.