FX.co ★ European stock market continues to fall on weak statistics on EU countries

On Thursday, the leading stock indicators of Western Europe showed a decline on the latest statistics on high inflation in Germany. In addition, investors continue to analyze the release of corporate earnings reports for the third quarter of 2022 from key companies in Europe.

So, at the time of writing, the composite index of the leading European companies STOXX Europe 600 sank by 0.3% to 396.54 points.

Meanwhile, only the French CAC 40 rose 0.1%, the German DAX fell 0.7% and the UK FTSE 100 shed 0.1%.

Rising and falling leaders

The value of securities of the Swedish manufacturer of telecommunications equipment Ericsson AB collapsed by 14.5%. In the third quarter of fiscal year 2022, the company's net income decreased by 7%, which was significantly worse than preliminary market forecasts.

Meanwhile, Finnish telecommunications company Nokia slipped 5.5% despite a 22% increase in net income in July-September and a 16% increase in revenue.

The market capitalization of the French producer and distributor of alcoholic beverages Pernod Ricard SA lost 1.3%. At the same time, the day before the company reported a 21.7% increase in revenue in the first quarter of fiscal year 2023.

The share price of the Swedish concern Volvo AB fell by 4%. In the third quarter, the company increased its net profit, but the final figure was significantly lower than analysts' forecasts.

Swedish Match AB, a Swedish maker of snus, tobacco, cigars, matches and lighters, jumped 1.6%. The day before, there were reports in the media that the American tobacco company Philip Morris plans to raise its buyout offer by 9%. At the same time, only a few weeks remain before the expiration of the period set for obtaining sufficient support from shareholders.

Shares of Norwegian fertilizer chemical company Yara International rose 5.5%.

The market capitalization of the Spanish bank Sabadell increased by 4.1%.

French luxury retailer Hermes surged 1.4% on a reported July-September 2022 sales spike. In addition, the company spoke about plans to raise prices by 5-10% next year amid rising costs and currency fluctuations.

Finnish banking group Nordea jumped 1% on the release of third-quarter 2022 operating income above market expectations. The unexpected positive results in July-September were explained by the company's growth in interest income.

Market sentiment

The focus of European stock market participants on Thursday is the latest statistics from Germany. Thus, according to the final assessment of the statistical agency Destatis, in September the level of industrial inflation in the country in annual terms remained at a high August mark of 45.8%. At the same time, the market predicted a decrease in the indicator to 44.7%. This state of affairs testifies to the permanently growing inflationary pressure in the German economy.

Analysts from Destatis attribute the increase in prices to a sharp jump in energy costs by 132.2% in annual terms. Thus, natural gas prices increased by 192.4%, while electricity prices rose by 158.3%.

The market expects that weak statistics for the region will provoke further decisive tightening of monetary policy by the European Central Bank. At the next meeting at the end of the month, the central bank may raise the interest rate by 75 basis points, which in turn can seriously aggravate the financial problems faced by households in European countries.

On Wednesday evening the sudden resignation of UK Home Secretary Suella Braverman was announced. In her resignation letter, the politician sharply criticized the leadership of British Prime Minister Liz Truss, which further increased the doubts of the British about the length of Truss's stay in power.

Recall that at the beginning of this week, representatives of the British Parliament from the Conservative Party called on the new prime minister to step down after some controversial economic decisions. The main claim of the Conservatives to Truss is the recent appointment of Jeremy Hunt as head of the UK Treasury. By the way, four ministers of finance have already been replaced in the country during the year.

As for news from the United States, on Wednesday the US Federal Reserve published a regional review, according to which the forecasts for the country's economy became more pessimistic due to permanently growing fears about weakening demand.

At the same time, since the beginning of autumn, the level of economic activity in the United States has been gradually increasing, but the situation varies significantly depending on the industry and region. At the same time, high interest rates, record inflation and constant interruptions in supply chains were the key factors of pressure on this economic indicator.

According to analysts' preliminary forecasts, within the framework of the November meeting, the Fed will once again raise interest rates by 75 basis points.

Trading results the day before

European stock indices closed in the red on Wednesday, breaking a four-day streak of growth.

As a result, the composite index of the leading European companies STOXX Europe 600 fell by 0.53% to 397.73 points. The French CAC 40 shed 0.43%, the German DAX sank 0.19% and the UK FTSE 100 shed 0.17%

The value of securities of the German biopharmaceutical company Sartorius AG collapsed by 18.5%.

Dutch food delivery service Just Eat Takeaway jumped 1%. In the third quarter of fiscal 2022, the company saw an 11% reduction in bookings due to a "difficult consumer backdrop." At the same time, the management reported the basic quarterly profit and stated that Just Eat Takeaway managed to return to positive results ahead of schedule.

The market capitalization of Dutch computer chip equipment manufacturer ASML Holding NV soared 8.2%. According to the results of July-September, the company reported an increase in net profit, sales and the number of new orders above market expectations.

The share price of the Swiss manufacturer of food and non-alcoholic beverages Nestle sank 1.3%. In the third quarter of 2022, the company increased revenue by 9.2% and improved its forecast for the year.

British online clothing and cosmetics retailer ASOS surged 8% after publishing a plan to reduce inventory and cut costs to keep the company in business amid declining consumer purchasing power.

British retailer THG Plc soared 16.2%.

On Wednesday, European investors analyzed the statistics for the region. Thus, according to the final estimate of the EU Statistical Office, in September, the annual inflation rate in 19 eurozone countries in annual terms increased to a record 9.9% since the beginning of the calculation of data from 9.1% in August. According to the preliminary estimate of the Statistical Office of the European Union, this figure was 10%.

Meanwhile, according to the National Statistics Office (ONS) of Great Britain, following the results of the past month, consumer prices in the country rose to a record 10.1% from 9.9% in August. At the same time, analysts predicted an acceleration of inflation only up to 10%.

The final September figure returned to the record value of July, which became the highest in 40 years. Experts expect that this state of affairs will provoke further decisive tightening of monetary policy by the Bank of England.