FX.co ★ European stock markets finish the week with a sharp increase

Against the background of the positive dynamics of the US and Asian stock markets, the leading exchange indicators of Western Europe showed an increase last Friday. Meanwhile, market participants are closely watching the publication of corporate earnings reports of leading European companies for the third quarter of 2022.

Thus, by the time of writing, the composite index of the leading European companies STOXX Europe 600 increased by 1.1% to 393.44 points.

Meanwhile, France's CAC 40 gained 1.31%, Germany's DAX rose by 1.11% and Britain's FTSE 100 increased by 1.13%.

Rising and Falling Leaders

The value of securities of the parent company of the UK postal service Royal Mail - International Distribution Services PLC - fell by 13.5%. Royal Mail posted an operating loss in the first half of the year, and its management announced its intention to lay off up to 10,000 employees by August 2023.

Quotes of the Swiss financial conglomerate Credit Suisse Group AG rose by 0.7%. The day before, Bloomberg, the leading provider of data, news and analytics for the business community, reported that Mizuho Financial Group, Inc., Japanese bank holding company plans to buy part of the securitized products division of Credit Suisse Group AG.

The market capitalization of the leading French nursing home and elderly care provider Orpea Group rose by 4.9%.

The share price of the British financial services company Quilter Plc increased by 5.1%.

Securities of the German energy company Uniper SE rose more than 5%.

Shares of the Swiss banking software companyTemenos plunged 21% after a profit warning.

The market capitalization of the Dutch navigation and digital mapping company TomTom sank by 6% amid the release of financial results for the third quarter.

The share price of the British investment management company Ashmore fell by 2.6%. In the first quarter, amid geopolitical and economic uncertainty and risk aversion, Ashmore assets lost $8 billion.

Market sentiment

On Friday, all the attention of the participants of the European stock market is focused on the September statistics on consumer prices in the United States, published the day before. Thus, according to fresh data from the Ministry of Labor of the country, following the results of the past month, annual inflation in America slowed down from 8.3% in August to 8.2%.

At the same time, the growth of consumer prices, excluding the cost of food and energy in annual terms, accelerated from 6.3% in August to 6.6%, thereby updating the record since 1982.

Despite the slowdown in inflation in the US, investors continue to worry about the prospects for further tightening of monetary policy by the US Federal Reserve during the November meeting. The market expects a 0.75 percentage point increase in November.

For reference, following the results of the two-day September meeting, the regulator raised the key rate range by 75 bp to the highest level since 2008 – 3.00-3.25%. This decision was taken unanimously by all 12 voting members of the Fed's Open Market Committee.

Tangible support for the European stock market on Friday was also provided by the strong performance of US stock exchanges on the basis of trading results the day before. Thus, on Thursday, the Dow Jones Industrial Average jumped 2.8%, breaking the November 2020 growth record. The S&P 500 soared 2.6%, while the NASDAQ Composite gained 2.2%. Positive dynamics on that Friday was also shown by key indicators of the Asia-Pacific region.

As for news from Europe, on Friday morning it was reported that the British government may forego £43bn of unfunded tax cuts included in the "mini budget" a few weeks ago. The night before, British Chancellor Kwasi Kwarteng had to cut short his trip to Washington and return to London because the end of the emergency purchase of bonds by the Bank of England is scheduled for Friday.

According to the final data provided by the INSEE (French Institute of Statistics and Economic Studies), consumer prices in the country increased by 6.2% in annual terms in September, compared with a 6.6% increase in August.

Trading results the day before

On Thursday, European stock indices ended the session with corrective growth. Thus, the composite index of the leading companies in Europe STOXX Europe 600 gained 0.85% and increased to 389.15 points. On the eve of the indicator stopped the six-day decline.

The French CAC 40 gained 1.04%, the German DAX rose by 1.51% and the UK's FTSE 100 increased by 0.35%.

The value of securities of the Sweden-based independent renewable energy company Orron Energy AB soared by 11%.

While the quotes of Sweco AB, the Swedish architecture and engineering consultancy company, fell by 6.7%.

The market capitalization of the British airline EasyJet PLC grew by 2.7%. The day before, the company's management announced that it expects to receive a pre-tax loss of $188.7-210.9 million for the 2022 fiscal year, which ended on September 30. Such a state of affairs may lead the air carrier to the third loss-making year in a row.

The share price of the Italian bank Banca Monte dei Paschi di Siena SpA fell by 33% after the company's management announced its intention to strengthen the balance sheet by implementing a plan to attract up to 2.5 billion euros.

The value of securities of the British specialist recruitment firm Hays fell by 0.6% against the background of a report on the slowdown in activity in the field of recruitment in the United Kingdom and the United States.

Quotes of the British construction company Taylor Wimpey decreased by 4.3%.

The market capitalization of the British gaming company Entain increased by 1.5%. The day before, the management of the company hinted at the fact that the FIFA World Cup, starting in November, could help increase revenues from online games in the fourth quarter.

On Thursday morning, the Federal Statistical Office of Germany published data on consumer prices in the country. Thus, according to the latest Destatis statistics, as of the end of September, annual inflation in the Federal Republic of Germany accelerated from the August value of 7.9% to a record level of 10%. In monthly terms, this indicator grew by 2.2%. At the same time, the dynamics of annual and monthly inflation coincided with the preliminary forecasts of analysts.

Last month's low indicators in the dominant economy of the Eurozone increase pressure on the European Central Bank regarding further tightening of the regulator's monetary policy.

On Thursday, the European stock market was also pressured by the weak indicators of the American stock exchanges following the results of the previous day's trading. Thus, on Wednesday, the Dow Jones Industrial Average index fell by 0.10%, the S&P 500 - by 0.33%, and the NASDAQ Composite - by 0.09%. The key indicators of the Asia-Pacific region also demonstrated a negative dynamic the day before.