FX.co ★ European stock market opened the week with growth

On Monday, the leading stock exchange indicators of Western Europe showed growth amid the release of strong statistical data for the region. At the same time, market participants are cautious, given the low rate of economic recovery of the eurozone countries.

So, by the time of writing, the aggregate indicator of the leading European companies STOXX Europe 600 increased by 0.15% to 432.93 points.

The French CAC 40 rose 0.28%, the British FTSE 100 gained 0.46%, and the German DAX increased by 0.31%.

Growth and fall

The value of securities of the German military-industrial company Rheinmetall AG jumped by 2.8% on the news of the purchase of the Spanish ammunition manufacturer Expal Systems SA. The transaction is worth 1.2 billion euros.

The quotes of the Swiss pharmaceutical company Roche Holding AG decreased by 4.1%. On Monday morning, the company announced the unsuccessful results of the third phase of trials of a drug for the treatment of Alzheimer's disease.

The market capitalization of the French telecom operator Orange SA increased by 1.4%. Earlier, there was information in the media about the purchase of Orange SA of two Swiss companies specializing in cybersecurity.

The share price of the German company Uniper SE, engaged in traditional electricity generation, soared by 9%.

The value of securities of the British organizer of publishing and exhibition events Informa rose by 6.6%. The day before, the company raised its profit forecast until the end of 2022.

Quotes of the British marketing group S4 Capital rose by 4.8% on the announcement of a tangible increase in revenue in the fourth quarter, despite multiple macroeconomic obstacles.

Market sentiment

European investors were analyzing fresh data on the region. Thus, in September, the volume of industrial production in the eurozone countries increased sharply by 4.9% in annual terms and by 0.9% on a monthly basis. At the same time, experts expected an annual growth rate of 2.8%, and a monthly growth rate of 0.3%.

This week, investors will also be focused on the news from the UK. The government will publish a new financial plan on Thursday. Earlier, British Chancellor Jeremy Hunt has already stated that the leadership of England will direct about 60 billion pounds in the form of tax increases and spending cuts to eliminate holes in public finances.

An additional upward factor for the European stock market on Monday was also reports from China on the development of a plan to support the real estate sector.

The new program provides for multiple measures to promote business, including solving the problems of developers with liquidity and reducing the requirements for the initial payment for the purchase of real estate. Analysts are confident that the new plan of the Chinese authorities is another important signal that the Chinese government intends to restore the country's economy by all means.

Recall that at the end of last week, the Chinese authorities announced an adjustment of the policy in the fight against COVID-19, announcing the dissolution of quarantine camps.

As for the news from America, member of the Federal Reserve Board of Governors of the US Christopher Waller called the reaction of financial market participants to the data on the slowdown in inflation "overly optimistic." In addition, Waller stressed that much remains to be done for the final stabilization of the US economy by the US central bank.

Previous trading results

On Friday, the leading stock indicators of Western Europe closed mainly in the green zone following the key indicators of the US and Asian stock markets. Investors were evaluating the final data on the level of consumer prices in America. In addition, market participants analyzed corporate profit statements for the third quarter of 2022 from key European companies, as well as recent macroeconomic statistics for the region.

As a result, the aggregate indicator of the leading European companies STOXX Europe 600 increased by 0.09% to 432.26 points.

The French CAC 40 rose by 0.58%, the British FTSE 100 sank by 0.78%, and the German DAX increased by 0.56%.

The value of securities of the Dutch packaging manufacturer Vopak NV soared by 17%. The day before, the company reported strong financial results for the third quarter, and also raised its annual forecast.

The quotes of the French service company Edenred fell by 5.7%.

The market capitalization of the British pharmaceutical giant GSK decreased by 4.6%.

The share price of the world's largest jewelry manufacturer Compagnie Financiere Richemont SA jumped by 10.5%. In the first financial half of the year, the company increased revenue and operating profit stronger than market expectations.

The value of securities of the German truck manufacturer Daimler Truck Holding AG decreased by 0.6%. At the same time, in July-September, the company increased revenue by 47% due to a 27% increase in sales. The key reason for the financial success of Daimler Truck, its management called the weakening of the shortage of chips, which hit the production of heavy trucks hard in the past year.

The quotes of the Italian bank Banca Monte dei Paschi di Siena SpA jumped by 1.6%. The company reported a net loss in the third quarter, but reported the successful completion of an additional issue of shares in the amount of 2.5 billion euros.

The market capitalization of the French financial conglomerate Credit Agricole increased by 0.9%. The day before, the bank announced the launch of a repurchase program for up to 16.7 million securities.

The share price of the French power engineering company Schneider Electric SE increased by 1%. On Friday, it became known that under pressure from investors, the company increased the size of the offer to purchase the British software developer Aveva Group Plc. Meanwhile, Aveva's quotes rose by 0.8%.

The value of the securities of the German energy company Uniper SE soared by 18.2%.

On Friday, the share price of luxury goods companies, in particular LVMH, Kering and Hermes International, rose significantly amid the weakening of anti-Covid restrictions by the Chinese government. Traditionally, China is considered an important European export market for products of this kind.

The day before, Chinese state media reported that the quarantine time for tourists coming to the country was reduced by 2 days to 5. The market hopes that such a decision by the Chinese authorities will be the first step towards further easing restrictions on movement in the country. Recall that during 2022, coronavirus outbreaks in a number of Chinese cities, including major financial centers Shanghai and Guangzhou, significantly limited the economic activity of the world's second largest economy.

In addition to studying the quarterly reports of the leading companies in the region, European investors also analyzed the long-awaited news from the United States. Data on consumer prices were published in America. According to the results of the past month, annual inflation in the US slowed sharply – to 7.7% (the lowest since January) from September 8.2%. At the same time, experts predicted that by the end of October, the consumer price index in the United States would drop to only 8% (the lowest since February).

The final data caused a wave of optimism in the US stock market, later the Asian stock exchanges took over the baton. So, according to the results of trading on Thursday, The Dow Jones Industrial Average index rose by 2.33%, the S&P 500 stock index increased by 3.79%, and the NASDAQ Composite soared by 5.03%.

In addition, investors hope that the final data on inflation in America will become a decisive argument in the question of the future course of monetary policy for the US Fed, which is closely watched by other central banks of the world. Thus, according to the largest North American financial derivatives market CME Group, in December 80.6% of experts expect the rate to rise by 50 basis points, and 19.4% – by 75 basis points.

Last Tuesday, voting in the midterm congressional elections began in America. Analysts and market participants suggest that Republicans may gain control of the House of Representatives. At the same time, the battle for the majority in the Senate continues with approximately equal chances of victory for both parties.

It is assumed that the Republicans gaining control of the House of Representatives may provoke a reduction in budget spending and an easing of regulation previously adopted by the Democratic Party.

At the moment, the counting of votes on the results of the elections continues in America, the final result may become known in a few weeks. At the same time, experts are confident that the key to controlling the Senate will be the struggle in the states of Arizona and Nevada.

In addition to news from the United States, European traders also analyzed statistical data from the countries of the region on Friday. Thus, according to the preliminary estimate of the National Statistical Office (ONS), in the third quarter, the country's gross domestic product sank by 0.2% compared to the last three months, showing a drop for the first time in a year and a half. At the same time, analysts expected a decrease of 0.5%. At the moment, the volume of the UK economy is 0.4% below the pre-pandemic level.

Last week, representatives of the Bank of England warned that the country had already entered a recession that could last about two years.

Meanwhile, according to the final data of the Federal Statistical Office of the country (Destatis), the level of consumer prices in Germany in October jumped by 11.6% in annual terms, which became a new historical record. In monthly terms, this indicator increased by 1.1%.