At Wednesday's trading, the key stock indicators of Western Europe show a spectacular increase of more than 1% after a six-day series of falls. The main reason for the confident jump of stock indicators was the news that the Board of Governors of the European Central Bank is convening an extraordinary meeting.
So, by the time of writing, the aggregate indicator of the leading companies in Europe, the STOXX Europe 600, increased by 0.52% to 409.44 points.
The highest results among the components of the STOXX Europe 600 are shown by the securities of the German manufacturer of primary packaging for medicines Gerresheimer AG (+11.8%) and the French company for the production of automotive components Faurecia SE (+5.6%). The list of declines here is headed by shares of the Swedish technology company Getinge AB (-15%).
Meanwhile, the British stock index FTSE 100 rose by 1.26%, the French CAC 40 rose by 1.09%, and the German DAX gained 1.25%.
Leaders of growth and decline
The value of securities of the British owner of a chain of stores at airports and train stations WH Smith increased by 5.4%. Earlier, the retailer reported an increase in revenue in the third fiscal quarter to a level 7% higher than in the same period of the pre-2019 year.
The quotes of the owner of one of Europe's largest clothing store chain H&M sank by 3.9%, despite the report on revenue growth in the second quarter of fiscal year 2022 by 17%. By the way, the published result was significantly higher than market expectations.
The market capitalization of the Dutch car manufacturing corporation Stellantis increased by 1.7% on news of the company's plans to reduce costs by laying off some employees in America.
The share price of the British publisher Bloomsbury Publishing soared by 5% after reporting a 40% increase in annual profit.
Current state of the market
On Wednesday morning, the France-Presse news agency reported that the ECB will hold a special meeting to discuss current market conditions and the issue of permanently rising inflation before the meeting of the US Federal Reserve.
Recall that last Thursday, representatives of the ECB kept key interest rates unchanged, but announced the possibility of the central bank's transition to a tighter monetary policy. Thus, the ECB confirmed its readiness to increase the key rate by 25 basis points during the July meeting. In addition, the ECB plans to raise rates again in September.
Market participants assume that, according to the results of today's meeting, the central bank will announce a sharp tightening of monetary policy amid record-rising inflation.
European investors were also focused on the results of the Fed's two-day June meeting on monetary policy, the announcement of which is scheduled for Wednesday evening. The market expects that the US central bank will announce an increase in the key rate by 75 basis points. At the same time, until recently, analysts were confident that the increase would be only 50 basis points, but the latest data on the record acceleration of inflation in the United States over the past 40 years in May makes them doubt such an optimistic scenario.
In addition, on Wednesday evening, the Fed will make forecasts on America's key economic indicators for the current year.
Trading results
As for the results of the previous trading session, European stock exchange indicators showed a steady decline on Tuesday.
As a result, the aggregate indicator of the leading companies in Europe, the STOXX Europe 600, decreased by 1.26% and ended up at 407.32 points, which was the lowest value since the beginning of 2021.
The securities of the Finnish energy concern Fortum Oyj (+6.6%) and the Norwegian oil company Equinor ASA (+5.7%) showed the highest results among the components of the STOXX Europe 600.
Shares of the French IT company Atos SE (-23.4%), the British operator of online supermarkets Ocado Group (-10.8%) and the Danish manufacturer of diagnostic equipment Ambu (-9.7%) topped the list of declines here.The quotes of the leading European banks showed permanent growth, since the increase in the key rate raises their interest income. As a result, Societe Generale securities soared by 0.72%, BNP Paribas – by 1.4%, Standard Chartered – by 3.5%, and Bank Polska Kasa Opieki – by 4.3%.
The market capitalization of the French insurer SCOR and tire manufacturer Michelin collapsed by 0.6% and 3.0%, respectively, amid the deterioration of analysts' recommendations for their securities.
Meanwhile, the British FTSE 100 index sank 0.25% to 7,187.46 points the day before, the French CAC 40 lost 1.2%, falling to 5,949.84 points, and the German DAX fell 0.91% to 1,3304.39 points.
Experts consider internal statistics on the region to be a key factor of pressure on the European stock market on Tuesday.
Thus, in May, the level of consumer prices in Germany rose to 7.9% from April's 7.4% in annual terms. The obtained indicator turned out to be a record for the entire history of its calculations by the Federal Statistical Bureau of the country and coincided with the preliminary data.
Meanwhile, in the past month, prices for wholesale goods in Germany increased by 22.9% after a record April rise of 23.8%
As for the internal statistics for the UK, according to the Office of National Statistics of the country, the economy of England significantly declined in April. Thus, the gross domestic product (GDP) of the state sank by 0.3% amid a simultaneous decline in production, services and construction for the first time since January last year.
In addition, the unemployment rate in the UK increased in May, despite a permanent increase in the overall employment rate.
Thus, the number of applicants for unemployment benefits decreased by 19,700, and the unemployment rate rose to 3.8%.
The decline in the UK economy occurred ahead of the Bank of England meeting scheduled for next Thursday. It is expected that following the meeting, the British central bank will increase the key rate by 0.25% for the fifth consecutive time since December 2021, after the inflation rate in the state soared to a four-year high in April and amounted to 9%.
