European stocks experienced a modest rebound on Wednesday following significant declines in the previous trading session. Despite ongoing apprehensions surrounding the Russia-Ukraine conflict, investors are shifting their focus towards corporate earnings and news, as well as evaluating the regional economic outlook.
The pan-European Stoxx 600 index saw an increase of 0.5%. Meanwhile, Germany's DAX, France's CAC 40, and the U.K.'s FTSE 100 recorded gains of 0.43%, 0.35%, and 0.21%, respectively. Switzerland's SMI also advanced by 0.6%.
On the geopolitical scene, the U.S. Embassy in Kyiv remained closed on Wednesday due to a warning of a potential Russian air strike on the Ukrainian capital. This precaution followed Russia's threat to retaliate against President Joe Biden's decision to allow Ukraine to target Russian locations with U.S.-manufactured missiles, a move that has provoked the Kremlin. Additionally, the Greek and Spanish embassies in Kyiv were shuttered to the public as air raid alarms sounded multiple times in the city overnight.
In the UK market, shares of Sage Group surged nearly 20% after the company posted strong annual results and launched a new share buyback initiative. Severn Trent's stock climbed 3.5% following a significant recovery in interim profits. Other companies, including United Utilities, Anglo American Plc, Beazley, IAG, Prudential, Mondi, Imperial Brands, Barclays Group, and Standard Chartered, saw increases between 1 and 2.5%.
Conversely, Convatec Group's shares fell nearly 3%. Stocks such as Persimmon, British Land Company, Admiral Group, Entain, Taylor Wimpey, Segro, Marks & Spencer, Vistry Group, EasyJet, and Howden Joinery dropped between 1 and 2.3%.
In Germany, Rheinmetall gained 2.7%, maintaining its upward trajectory from the previous session. Brenntag rose almost 2%, while HeidelbergCement, Zalando, SAP, Deutsche Bank, Deutsche Telekom, and Adidas increased between 1 and 1.3%.
Meanwhile, Porsche's shares declined by more than 3%, and Symrise, Sartorius, Fresenius, Merck, and Mercedes-Benz faced moderate declines.
In Paris, Edenred advanced nearly 4% after a rating upgrade, while Kering increased by 2.3% and Teleperformance saw a rise of 1.8%. Dassault Systemes, Airbus, LVMH, and Societe Generale each gained between 1 and 1.2%.
Conversely, shares of STMicroElectronics, Thales, Capgemini, Renault, and Stellantis suffered notable to moderate declines.
Within the Swiss market, private equity firm Partners Group's shares rose 1.5% following its acquisition of a majority stake in the Spain-based Bluesea Hotels. The firm will join Bluesea's board and oversee its renovations, expansion, and hotel acquisitions in collaboration with Portobello Capital.
On the economic front, UK consumer price inflation surged more than anticipated in October, reducing prospects for an interest rate cut at the forthcoming monetary policy meeting in December. The consumer price index increased by 2.3% on an annual basis, following a 1.7% rise in September, which marked the lowest level since April 2021, according to the Office for National Statistics. This rate surpasses the Bank of England's 2% target and was higher than economists' prediction of 2.2%. Core inflation unexpectedly rose to 3.3% from 3.2% in September, against a projected rate of 3.1%.
In Germany, producer prices dropped by 1.1% on an annual basis in October, after a 1.4% decline in the previous month, as indicated by Destatis data. On a monthly basis, producer prices rebounded by 0.2% after a 0.5% decrease in September.
Eurozone construction output fell by 0.1% monthly, following a period of stability in August, according to Eurostat data. Annually, the decline in construction output eased to 1.6% from 2.5%.
