The key exchange indicators of Western Europe showed a decline on Tuesday amid the withdrawal of market participants from risks. Investors are concerned about the permanently increasing geopolitical tensions between the United States and China, and are also discussing the prospects of a large-scale economic downturn.
So, by the time of writing, the aggregate indicator of the leading companies in Europe, the STOXX Europe 600, had plunged by 0.67% to 434.52 points.
Meanwhile, the British FTSE 100 lost 0.16%, the French CAC 40 declined by 0.63%, and the German DAX fell by 0.18%.
Leaders of Growth and Decline
The value of securities of the Italian insurance company Assicurazioni Generali SpA decreased by 1.4%. The day before, the company's managers reported a write–off of 138 million euros in January-June of this year due to the depreciation of investments in Russia.
The quotes of the British oil company Genel Energy PLC fell by 6.3%, despite the fact that in the first half of the year it increased net profit and revenue due to high oil prices.
The market capitalization of another British oil and gas company – British Petroleum Plc – soared by 4.5%. Following the results of the second quarter, the company reported record financial results over the past 14 years (profit tripled to $9.26 billion, and revenue doubled to $69.51 billion), which allowed it to increase the volume of dividend payments by 10%.
The share price of the Austrian banking group Raiffeisen Bank International AG increased by 6.3%. In the past January-June, the company significantly increased its net profit, mainly due to the sale of business in Bulgaria.
The value of securities of the European low-cost airline Wizz Air Holdings PLC increased by 0.04%. In July of this year, the company increased the number of passengers transported compared to the same month in 2021 – to 4.8 million from 3 million.
The stock prices of the Danish transport and logistics company A.P. Moeller-Maersk AS rose by 1.5%. Earlier, the shipping giant raised its annual forecast until the end of 2022 amid a permanent increase in freight rates.
The market capitalization of the British bakery chain Greggs PLC increased by 2.2%. The day before, the company's managers reported that in the first half of the year, its sales volume increased by 27% year-on-year, thanks to which Greggs kept its profit forecast for 2022 unchanged.
Market Sentiment
European investors continue to study the financial statements of leading companies in the region to assess the state of business in the face of record inflation.
In addition, market participants are analyzing the prospects for the escalation of geopolitical tensions between the two world economic superpowers – China and the United States – amid a possible visit to Taiwan by the Speaker of the House of Representatives of the American Congress Nancy Pelosi.
Pelosi is currently in Malaysia, where she is scheduled to meet with Prime Minister Ismail Sabri Yaacob and Speaker of Parliament Azhar bin Azizan Harun.
Taiwanese media reports that the American politician will arrive in Taipei on Tuesday evening after visiting Malaysia.
Earlier, the Chinese Defense Ministry warned that Nancy Pelosi's trip should be canceled, otherwise the Chinese military will "resolutely defend China's national sovereignty." Despite this, many experts are confident that Pelosi will almost certainly visit the territory claimed by Beijing.
Trading Results the Day Before
Last Monday, European stock exchange indicators showed a drop amid a spectacular collapse in the global oil price.
As a result, the aggregate indicator of the leading companies in Europe, the STOXX Europe 600, decreased by 0.19% to 437.46 points.
Securities of the British management company Quilter Plc (+14.6%) and the British educational services publication and evaluation service Pearson (+12.7%) showed the best results among the components of the STOXX 600 on Monday.
The shares of the British supplier of control and measuring equipment Spectris Plc and the Norwegian company NEL ASA, working with renewable energy sources, topped the drop list here.
Meanwhile, the British FTSE 100 sank by 0.13%, the French CAC 40 lost 0.18%, and the German DAX fell by 0.03%.
The market capitalization of the British bank HSBC Holdings Plc increased by 6.1% amid the release of reports for the second quarter of the 2022 financial year. The largest bank in the region increased its net profit by 62% and promised to resume quarterly dividend payments in 2023.
The stock prices of the Austrian banking group Erste Group Bank AG sank by 1.4%, despite the report on a tangible increase in net profit in the first half of the year amid rising interest rates.
The value of securities of the Dutch brewing company Heineken decreased by 0.4%, despite the fact that in the first half of the year its net profit increased by 22% and revenue by 37%.
The value of securities of the German software developer SAP SE rose by 1.1%. The day before, the company announced the launch of a share repurchase worth 500 million euros.
European stock market participants were focused on the news about the fall in oil prices by 4-5%, which instantly affected the energy sector in Europe. As a result, the market capitalization of energy companies British Petroleum, Shell and TotalEnergies collapsed by 1.9%, 1.7% and 1.6%, respectively.
In addition, investors analyzed key data on macro statistics in the eurozone. Thus, at the end of July, the business activity index (PMI) in industrial production in 19 countries of the euroregion amounted to 49.8 points. Analysts expected the indicator to grow to 49.6 points. At the same time, unemployment in the eurozone in June remained forecasted at the May level of 6.6% – the lowest for the entire time of calculations.
Meanwhile, the German industrial PMI turned out to be higher than the preliminary scenarios – 49.3 points against the expected 49.2 points.
The volume of retail sales in Germany in June fell by 8.8% year-on-year, and on a monthly basis - by 1.6%. At the same time, the annual decline was the highest since the beginning of the collection of data on retail sales in the country in 1994. By the way, the market on average expected an increase of 0.2%.
According to the Italian statistical agency IStat, the June unemployment rate in the country fell to 8.1% from 8.2% in May. The final figure coincided with analysts' forecasts.
