On Wednesday, major European stock indices declined despite fresh statistics indicating that inflation in the eurozone was accelerating less sharply than the market had forecasted. Moreover, investors are closely monitoring the publication of corporate earnings reports for the third quarter of 2022 from European top companies.
The STOXX Europe 600 index of Europe's leading companies sank by 0.23% to 398.91 points by the time of writing, breaking a four-day period of growth.
Meanwhile, only the French CAC 40 gained 0.43%, the German DAX fell by 0.1%, and the British FTSE 100 lost 0.2%.
Top gainers and losers
Stocks of German biopharmaceutical company Sartorius AG. plunged by 14%.
Quotes of Dutch food delivery service Just Eat Takeaway.com rose by 0.6%. In the third quarter of fiscal 2022, the company cut orders by 11% due to a "challenging" consumer backdrop. At the same time, the management reported underlying quarterly profits and said that Just Eat Takeaway.com had managed to return to positive results ahead of schedule.
The market capitalization of Dutch computer chip maker ASML Holding NV soared by 6.8%. At the end of July-September, the company reported an increase in net income, sales and number of new orders above the market expectations.
The stocks of Swiss food and soft drink maker Nestle rose by 0.5%. The company increased revenue by 9.2% in the third quarter of 2022 and improved its outlook for the year.
The stocks of British online clothing and cosmetics retailer ASOS increased by 8% after it announced a plan to reduce inventory and cut costs to maintain its business amid a decline in consumer buying power.
Market sentiment
On Wednesday, European stock market participants focused on fresh eurozone statistics. According to the final estimate of the European Statistical Office (Eurostat), the annual inflation rate in 19 EU countries rose to a whopping 9.9% in September since the start of the data calculation from 9.1% in August. According to a preliminary estimate of Eurostate, this figure totaled 10%.
Meanwhile, according to the Office for National Statistics (ONS), consumer prices in the UK rose to a record 10.1% by the end of September from 9.9% in August. At the same time, analysts forecasted acceleration of inflation only to 10%.
The final indicator in September returned to the record value of July, the highest figure in 40 years. Experts believe that this fact will provoke further hawkish tightening of the monetary policy by the Bank of England. Future interest rate hikes by the UK regulator could seriously exacerbate the financial problems faced by British households.
Previous trading results
On Tuesday, European stock indices closed in the green zone. As a result, the composite indicator of Europe's leading companies STOXX Europe 600 gained 0.3% and rose to 399.84 points. The CAC 40 added 0.4%, the DAX increased by 0.9%, and the FTSE 100 was up 0.2%.
The day before, the stocks of European automakers rose dramatically on data from the European Automobile Manufacturers' Association (ACEA). According to the latest information from the ACEA, car sales in the EU soared by 9.6% last month compared to September 2021. At the same time, index growth was registered in EU countries regarding the outcome of the second month after permanent decline during thirteen months.
Consequently, Volkswagen stocks rose by 1.3%, Mercedes-Benz advanced by 3.4%, Stellantis added 2.2%, BMW was up 1.4%, and Renault gained 0.8%.
Quotes of French advertising holding Publicis Groupe SA rose by 2.3% due to an improved forecast of organic growth in revenue to 8.5% for 2022. At the same time, earlier the company's management expected that revenue would increase by only 6-7% due to the reduction of customer spending.
The market capitalization of Swiss drugmaker Roche Holding fell by 0.3%. The day before, the pharmaceutical company reported an 8% drop in quarterly sales amid a downturn in the treatment of COVID-19. Despite this fact, Roche Holding confirmed its annual forecast.
The stocks of Swiss reinsurance company Swiss Re rose by 0.3%. At the same time, the company's management said it expected insurance claims of $1.3 billion to cover devastation related to Hurricane Ian, which could potentially trigger a net loss of $500 million in the third quarter.
The stocks of Swiss bank Credit Suisse increased by 2.3%. Earlier, the international news agency Reuters reported that the company had asked at least one sovereign fund in the Middle East for an infusion of capital. If Credit Suisse's plans come to fruition, a positive transformation of the struggling financial group is quite possible.
Quotes of Australian-British mining and metals group Rio Tinto fell by 1.5%. The company lowered its annual forecast for refined copper production and said that iron ore shipments would be closer to the lower limit of its forecast in 2022.
On Tuesday, European stock market participants focused on EU statistics. The Investor Confidence Index in the German economy for the next six months increased to -59.2 points in October from -61.9 points in September. Meanwhile, economists expected the decline of the index to -65.7 points.
The day before, during his speech in the House of Commons UK Minister of Finance Jeremy Hunt announced that he would reverse almost all the tax measures offered by his predecessor Kwasi Kwarteng at the end of September.
Therefore, the British government will increase the corporate tax rate from 19% to 25% from April 2023 and will abandon its plans to cut the dividend tax, implement pay reform and introduce a zero VAT rate for foreign buyers.
Jeremy Hunt's new fiscal plan will likely save £32 billion. In addition, the proposal voiced by the finance minister may push the Bank of England to refuse to raise the interest rate at its November meeting by as much as previously expected. On Tuesday, analysts from US financial conglomerate Morgan Stanley predicted a rate hike of 75 basis points against a previous estimate of 100 basis points.