FX.co ★ European stocks falling while traders contemplate FED plans

On Friday, the leading stock market indicators in Western Europe declined. Throughout the trading day, traders are closely monitoring the conflict in the Middle East and are keenly avoiding risks. Additionally, investors from around the world are discussing the remarks made by the head of the US Federal Reserve and are awaiting signals of the end of the interest rate hike cycle from major central banks.

As of the time of writing, the composite index of the largest European companies, Stoxx Europe 600, has dropped by 0.95%. Meanwhile, the French CAC 40 fell by 1.15%, the German DAX lost 1.24%, and the British FTSE 100 declined by 0.68%.

Worst performers

The stock value of Italian automaker Iveco fell by 2.8%.

Shares of the transnational car manufacturer Stellantis declined by 1.9%.

The market capitalization of the French perfume and cosmetics company L'Oreal SA dipped by 0.8%. Notably, in the third quarter, the company increased sales by 4.4% compared to the same period in 2022.

The share price of the British hotel chain InterContinental Hotels Group Plc dropped by 2.2%, even though the company recorded revenue growth per room and increased hotel occupancy in the third quarter.

The stock value of the financial holding UBS decreased by 1.4%. It was recently announced that Roger von Mentlen has been appointed as the chairman of the board of directors for the Swiss subsidiaries of this bank.

Shares of the Italian fashion house Salvatore Ferragamo dropped by 2.8% after reporting a decline in revenue from January to September to 844 million euros from 920.7 million euros a year earlier. The decline in financial results was due to weaker performance in both retail and wholesale sales channels.

The market capitalization of another Italian fashion house, Brunello Cucinelli, jumped by 4.3%. From January to September, the company increased its revenue to 818.4 million euros from 642 million euros for the corresponding period last year. They also raised their annual revenue growth forecast to 20-22% from 19%.

The stock price of the French media conglomerate Vivendi rose by 2.5%, thanks to the publication of positive financial statements. For the first nine months of the current year, the company increased its revenue to 7.12 billion euros from 6.9 billion euros a year earlier.

Market sentiment

Today, investors absorbed news from Europe. According to the European Automobile Manufacturers' Association (ACEA), car sales in the European Union rose 9.2% in the past month compared to September of the previous year. This marks the 14th consecutive month of growth.

The UK's Office for National Statistics (ONS) reported a 0.9% decline in retail sales for the last month compared to August. Analysts had predicted a more modest 0.4% decrease. Year-on-year, retail sales contracted by 1%.

Britain recorded a budget deficit of £14.3 billion in September. On a year-on-year basis, this figure is down by £1.6 billion. Experts had expected a deficit between £18-19 billion.

Meanwhile, Germany's Federal Statistical Office (Destatis) reported a significant 14.7% annual drop in producer prices for September, marking the largest decrease in recorded history. Analysts had predicted a 14.2% decline.

Jerome Powell, the chair of the U.S. Federal Reserve, spoke at the New York Economic Club, emphasizing the steady rise in the U.S. economy. Powell mentioned that if current trends continue, there might be considerations to raise interest rates.

The ongoing conflict between Israel and the Hamas group continues to exert pressure on European stock markets. Tensions in the Middle East have been escalating due to anti-Israel protests in the region.

Israeli media outlets reported that the Israel Defense Forces (IDF) targeted several facilities linked to the Shiite movement "Hezbollah" in Lebanon. Additionally, Israeli forces struck over a hundred targets in the Gaza Strip on Friday night.

Trading outcomes the day before

On Thursday, leading stock indicators of Western Europe sharply declined following hawkish statements from the head of the US Federal Reserve, Jerome Powell. Additional pressure on the markets came from weak corporate reports of key companies in the Euro region.

The composite index of the largest European companies, Stoxx Europe 600, dropped by 1.2%. The French CAC 40 fell by 0.64%, the German DAX lost 0.33%, and the British FTSE 100 decreased by 1.17%.

The value of securities of the British business services group Rentokil Initial plummeted by more than 13% due to a decrease in demand for the company's services in North America.

The stock prices of the Swiss food producer Nestle fell by 3.4%. The company had previously reported slower-than-expected sales growth over the past nine months. Nestle's management stated that the weak financial results were due to high prices that deterred buyers and negatively impacted sales volumes.

The market capitalization of the French automaker Renault dropped by 7.3% due to slowed sales growth against the backdrop of currency devaluation. For the third quarter, the company's revenue increased by 7.6% to 10.51 billion euros. Analysts, on average, had forecasted a figure of 10.34 billion euros. Meanwhile, Renault's car sales from July to September increased by 6.1% to 511 thousand units.

Shares of the Finnish manufacturer of telecommunication equipment for mobile, fixed, broadband, and IP networks, Nokia, dropped by 6.4%. The company's management announced plans to cut up to 14,000 jobs by the end of 2026 as part of a cost-reduction program. In the third quarter, the company's net profit decreased by more than threefold, and revenue by 20%. Both indicators were significantly below analysts' forecasts.

The value of Tesla securities traded on the Frankfurt Stock Exchange fell by 5.12%. Tesla's gross margin for the third quarter did not meet investor expectations.

Share prices of the British digital wealth management service provider, Hargreaves Lansdown, dropped by 4.4% following news of a slowdown in the influx of new clients in the first quarter.

The market capitalization of the German enterprise software manufacturer SAP increased by 5.1%. In the third quarter, the company doubled its net profit and saw a revenue increase of 4%.

The share price of one of the largest European stock exchange operators, Deutsche Boerse AG, increased by 0.3%. From July to September, the company increased its net profit and revenue and also raised its revenue and EBITDA forecasts for the entire current year.

On Thursday, European investors showed a reluctance towards risk sentiments against the backdrop of a rise in the yield of US government bonds to 16-year highs before Jerome Powell's address.

Additionally, traders previously analyzed statistical data from France. In October, the business confidence index in the country fell to 98 points from September's 99 points.