On Tuesday, leading stock exchange indicators of Western Europe are rising after a loud collapse the day before. The main reason for the market's positivity is strong corporate indicators from Germany. In the meantime, concerns about prospects of a recession in the global economy still put significant pressure on investor sentiment.
Thus, at the time of writing, the composite indicator of the leading companies in Europe STOXX Europe 600 rose by 0.15% to 413.99 points. Among the STOXX Europe 600 components, the German food delivery service Delivery Hero SE became a top gainer and rose by 7.5%.
Meanwhile, the French CAC 40 index gained 0.43%, the German DAX index rose by 0.74%, and the British FTSE 100 index added 0.36%.
Top gainers and losers
The stocks of the German carmaker Volkswagen AG soared by 3.3%. Volkswagen Chief Financial Officer Arno Antlitz said Tuesday that an IPO of German carmaker Porsche could take place as early as late September or early October. It is planned that up to 25% of preferred shares will be placed on the stock exchange, which is 12.5% of the share capital. Thus, Porsche's IPO may become the largest in the history of IPO on the stock exchanges in Europe.
German Deutsche Lufthansa AG's stock rose by 0.6%. Yesterday, CEO Carsten Spohr announced that Deutsche Lufthansa planned to hire about 20,000 new employees by the end of next year amid a permanent industry recovery from the pandemic.
The market capitalization of the Finnish air carrier Finnair Oyj increased by 0.5%.
The share price of Russian mining company Polymetal International PLC soared by 7.4%.
The value of the securities of the British bakery chain Greggs PLC rose by 6.7%.
The market capitalization of Swiss financial conglomerate Credit Suisse gained 2.3%. Earlier there was the news that the banking giant is selling its global trust divisions Bank of N.T. Butterfield & Son, Ltd. and Gasser Partner Trust.
Current market situation
On Tuesday, European investors focus on corporate news from Germany. Thus, according to the German Ministry of Economics, the country's industrial orders fell by 1.1% month-on-month in July. The decrease was recorded for the fifth month in a row out of six months. This was another proof of the downward trend since the start of the military conflict in Ukraine in February.
Analysts expected a decline of 0.5% in July. According to the revised data, German industrial orders in June fell by 0.3%, rather than by the previously reported 0.4%.
Yesterday, the Reserve Bank of Australia increased its interest rate by 50 basis points to 2.35%, the highest level since 2014, It was the fifth consecutive rate hike in 2022.
As for the UK, Foreign Secretary Liz Truss is set to meet with Queen Elizabeth II on Tuesday to confirm her as the country's next prime minister. Earlier, Truss had pledged tax cuts and support for households facing huge energy bills.
The day before, Liz Truss won the race for the leadership of the Conservative Party, beating her rival, former head of the Ministry of Finance Rishi Sunak.
In addition, eurozone stock markets participants are focused on the European Central Bank meeting scheduled for Thursday. At the upcoming meeting, regulators are expected to decide on a second sharp interest rate hike to prevent the region's economy from diving deeper.
Recent trading results
On Monday, European stock exchange indicators declined. The main reason for the negative market sentiment was the shutdown of the Nord Stream pipeline and a sharp jump in global gas prices.
As a result, the composite indicator of the leading companies in Europe STOXX Europe 600 fell by 0.62% to 413.39 points.
The French CAC 40 index lost 1.2%, the German DAX dropped by 2.2%, and only the British FTSE 100 gained 0.09%.
The value of the securities of German electricity producer Uniper plummeted by almost 11%. As a result, the price per share of the company was below the all-time low of €5.
Another German energy company, RWE, fell by 3.16% on Monday.
The market capitalization of British housing and urban reconstruction company Countryside Properties soared by 5.2%. Earlier, The Wall Street Journal reported that the company was planning a merger with a major British real estate developer, Vistry, to create a $3.2 billion real estate developer. Vistry's securities rose by 1.9% on the news.
The share prices of French auto parts and components makers and suppliers Faurecia and Valeo fell by 6.1% and 7.5% respectively.
The value of the securities of the Swiss financial holding UBS Group AG dropped by 1.1%. Yesterday, the company refused to buy Wealthfront for $1.4 billion, without announcing the reasons for its decision.
The world's steel producer, ArcelorMittal SA, plummeted by 3.2%. Earlier, the company said it intended to close two plants in Germany and shut down a plant in Spain amid a sharp increase in energy prices.
Last Friday, Russia's Nord Stream, one of the main pipelines to Europe, did not start operation after three-day scheduled maintenance. At the same time, Russia canceled the Saturday deadline for resuming gas flow through Nord Stream. The news came after the G7 finance ministers agreed to a plan to cap the price of Russian oil exports.
Gazprom attributed this state of affairs to malfunctions on the Trent 60 gas compressor unit due to an oil leak. In response, the German company Siemens stated that it did not consider these malfunctions a technical reason for stopping the gas pipeline. Later, Gazprom announced that Siemens was involved in the repair of the gas compressor unit and was ready to eliminate the malfunctions, but could not finish the work due to the sanctions imposed earlier.
Lately, the Nord Stream pipeline has been operating at only 20% of its capacity. Its shutdown for scheduled maintenance has pushed up already record gas prices and raised fears about Europe's energy supply in the run-up to winter. On Monday, gas prices soared by 11% on the back of Friday's news from Gazprom.
Experts believe that constantly rising energy prices will further increase inflation in the eurozone, which is already rapidly approaching double digits.
On Monday, European investors also digested statistical data from the eurozone. Yesterday, it became known that in August the composite business activity index S&P Global Composite in the industry of 19 countries of the region decreased to 48.9 points, instead of 49.2 points, as was expected earlier. In July, the index logged 49.9 points.
Meanwhile, the services PMI dipped to 49.8 points in August from 51.2 points in July. This was the first time since March 2021 that the index fell below the 50-point mark.
According to Eurostat, retail sales in the eurozone increased by 0.3% in July compared to June, when the indicator dropped by 1%. At the same time, the market was expecting the index to grow by 0.4%.
A fresh publication of the index of economic expectations in the eurozone, which declined to -37 points in September from -33.8 points in August, became an additional factor that put pressure on the European stock exchanges on Monday. The September value was the lowest since the global crisis in 2008.
Meanwhile, business activity in Germany's service sector declined for the second month in a row. The index fell to 47.7 points, down from 49.7 points in July. The composite PMI fell to 46.9 points in August from 48.1 points in July.
