FX.co ★ European stocks rise, investors analyze business conditions in eurozone

On Wednesday, the key European stock indices mostly increased, only the British FTSE 100 was trading in the red zone. Traders focused on the European Central Bank meeting scheduled for Thursday. In addition, traders continue to analyze corporate earnings reports for the third quarter of 2022 from top companies in the EU.

At the time of writing, the composite indicator of Europe's leading companies STOXX Europe 600 lost 0.1% and fell to 407.20 points.

The French CAC 40 gained 0.17%, the German DAX added 0.52%, and the British FTSE 100 dropped by 0.11%.

Top gainers and losers

The stocks of Italian commercial bank Unicredit jumped by 3.4% after the news came of a more dramatic revenue increase than market forecasts both in January-September and in the third quarter 2022. In addition, the Italian bank raised its earnings forecast until the end of 2022.

The quotes of Dutch brewery Heineken dropped by more than 10%. Earlier, the managers of the world's second largest beer producer reported signs of declining demand for its products in the EU and warned about a slowdown in economic growth in the future. At the same time, the company increased its revenue by 27.5% at the end of the third quarter of fiscal 2022. However, it did not justify the consensus forecasts of analysts.

The market capitalization of British bank Barclays Plc fell by 1.2% despite the fact that the company increased its net income by 10% in July-September amid strong fixed-income trading. The bank's final figure noticeably exceeded analysts' preliminary expectations. Moreover, the management of Barclays Plc reported a significant increase in reserves in the reporting period.

The stocks of Germany's largest bank Deutsche Bank AG dropped by 1.9%. At the same time, the company increased its net profit by 475% in the previous quarter of fiscal 2022, significantly exceeding analysts' expectations. Deutsche Bank's management team reported permanently difficult market conditions and increasing cost pressure.

The stocks of Spanish bank Banco Santander declined by 4.8%. In July-September, the net profit of one of the largest banks in the EU increased by 11%, which significantly exceeded market expectations.

The stocks of Swedish music streaming service operator Spotify Technology plummeted by 5.2%. The company increased its revenue by 21% In the third quarter of fiscal 2022. However, it suffered a net loss compared to the profit for the same period in 2021.

The market capitalization of British bank Standard Chartered was also down 5.2% due to a 32% increase in pretax earnings in the previous quarter.

The stocks of German chemical company BASF SE rose by 1.2%. The day before, BASF SE confirmed its forecast of financial performance for 2022 and reported a decrease in net profit in July-September.

The stocks of German sporting goods maker Puma SE sank by 1.8%. The company increased its net profit in the third quarter. However, its profitability fell amid higher prices for raw materials.

Quotes of UK consumer goods maker Reckitt Benckiser Group Plc dropped by 4.6% despite the fact that the company increased revenue by 14% in the previous quarter due to positive changes in exchange rates. In addition, Reckitt Benckiser Group Plc's management projected that sales for 2022 would be within the upper boundary of the previous forecast.

The market capitalization of German carmaker Mercedes-Benz Group AG fell by 0.3%. At the same time, the company increased revenue by 19% and more than doubled its net profit in July-September due to higher demand and prices for its products.

Market sentiment

In addition to quarterly reports from top European companies, on Wednesday stock market participants awaited the European Central Bank meeting, which is scheduled for Thursday. Analysts predict that the regulator will aggressively tighten its monetary policy amid permanently rising inflation in the eurozone. The ECB is expected to raise the interest rate by 0.75% to 2% from 1.25%.

On Wednesday, traders also awaited fresh data on consumer confidence in France for October.

Previous trading results

On Tuesday, European stock indices closed mostly in the green zone.

At the end of trading, the composite indicator of Europe's leading companies STOXX Europe 600 rose by 1.44% to 407.61 points. The French CAC 40 gained 1.94%, the German DAX added 0.94%, and the British FTSE 100 rose by 0.01%.

The stocks of British banking group HSBC Holdings dropped by 6.8% after the news of its net profit cut by 46% in the third quarter.

The stocks of German SAP SE, the world's biggest producer of software for business management, rose by 6.5%. Earlier, the company reported a 15% increase in revenue to 7.8 billion euros in July-September 2022. The final indicator significantly exceeded the preliminary market forecasts.

The market capitalization of British retailer THG Plc soared by 19%.

The stocks of Swedish streaming service Viaplay plummeted by 28%.

The stocks of Swiss bank UBS Group AG advanced by 7.7%. In the third quarter, the company recorded a net profit and revenue above the preliminary estimates of experts, while its final figures dropped by 24% and 10% respectively.

The stocks of French telecommunications operator Orange SA fell by 0.9% despite an increase in quarterly revenue in July-September.

The market capitalization of French spirits producer Remy Cointreau SA sank by 4.8%. Meanwhile, the company recorded a sharp increase in revenue in the first half of fiscal 2022 amid weakening of the euro against the US dollar and Chinese yuan.

On Tuesday, European investors analyzed the latest statistics on Germany. According to data from Munich-based Ifo Institute for Economic Research, the Business Climate Index in Germany fell to 84.3 points, its lowest level since May 2020, from a revised reading of 84.4 points in September. At the same time, analysts forecasted the decline of the Business Confidence Index in Germany to 83.3 points.