European equities ended Thursday on a positive trajectory, as investors monitored the unfolding political scenario in France and assessed recent regional economic figures. President Emmanuel Macron now faces the challenge of steering France out of a political quagmire following the ousting of Prime Minister Michel Barnier through a no-confidence vote linked to a budget dispute. This development marks Barnier as the most transient prime minister in France's contemporary history.
It is anticipated that France may be left without a government for an extended period, potentially spanning weeks or months, as Macron works towards appointing a new Prime Minister tasked with forming a fresh government. Although the State and social security budgets for 2025 await parliamentary approval, the French Constitution provides mechanisms to prevent a situation akin to a governmental shutdown in the United States.
On the stock front, the pan-European Stoxx 600 rose by 0.4%. The U.K.'s FTSE 100 edged up 0.16%, Germany's DAX increased by 0.63%, and France's CAC 40 finished 0.37% higher. Switzerland's SMI made a marginal gain of 0.06%. Elsewhere across Europe, markets including Austria, Finland, Greece, the Netherlands, Poland, Portugal, Russia, Spain, Sweden, and Turkey experienced a rise in their indices. Meanwhile, Belgium and Denmark ended the day on a downturn, while Norway's market remained flat.
Within the U.K. market, Hiscox surged by over 5%, while companies such as Whitbread, Diageo, Admiral Group, IAG, and Vodafone Group, among others, registered gains between 2 to 4%. Stocks like Aviva, Easyjet, Centrica, and several others rose from 1.3% to 2%, with AstraZeneca advancing by approximately 1.3% following the FDA's approval of Imfinzi for limited-stage small cell lung cancer. Future Plc's shares skyrocketed nearly 10% after disclosing its full-year results for 2024.
Conversely, Frasers Group plummeted almost 11% after reducing the higher end of its full-year profit outlook. British Land fell by 5%, Segro closed nearly 3% lower, and Smith (DS) suffered a 2.5% decline following a decrease in half-year revenue and profits. Other companies like Londonmetric Property and Associated British Foods saw losses ranging from 1.3% to 2.5%.
Turning to Germany, Puma gained nearly 5%, with Commerzbank, Siemens Energy, and others recording increases of 2 to 3%. Several big names, including Zalando and Bayer, ended the day with significant gains, while Sartorius and Vonovia experienced moderate losses.
In France, banking stocks benefitted from optimism that a government shutdown could be avoided, with Accor climbing 5%. Major companies like Societe Generale, Stellantis, and Credit Agricole posted higher valuations between 1.5% and 4.2%. However, Safran fell over 6.5% after announcing new financial targets.
Economically, Germany's new manufacturing orders decreased at a slower-than-expected rate in October due to wavering domestic demand, but September's figures were notably revised upwards because of an unusually large order in the shipbuilding industry. France's industrial production dipped by 0.1% in October, missing economists' predictions of a 0.3% recovery.
The U.K.'s construction industry grew robustly in November, fueled by an increase in commercial projects, with the Purchasing Managers' Index improving to 55.2 from October’s 54.3, marking growth for the ninth consecutive month. Conversely, Eurozone retail sales fell for the first time in four months, registering a monthly decline of 0.5% in October, exceeding predictions of a 0.4% drop.
Germany's construction sector faced tougher times, with its corresponding Purchasing Managers' Index falling to 38.0. Housing activity dropped considerably, and commercial work experienced its fastest decline since January, whereas civil engineering contracted more modestly.
In Switzerland, the unemployment rate saw a slight uptick in November, climbing to 2.6% from 2.5% the previous month. The corresponding month the previous year showed a lower rate of 2.1%.
