European stocks pushed ahead at the opening again on Thursday despite a survey showing a marked slowdown in Eurozone business growth during September.
The pan-European STOXX 600 index gained 0.85% after Asian stocks rose on the back of a 30% spike in Evergrande shares in Hong Kong as worries over the property developer’s debt eased.
Eurozone business growth slowed markedly in September as demand peaked and supply chain problems affected production and deliveries, a survey showed.
IHS Markit’s flash composite output purchasing managers’ index dropped to 56.1 from 59 a month earlier. The reading was a five-month low and fell short of analysts’ average forecast of 58.5.
Slowing growth was led by manufacturing where output dropped to an eight-month low of 56.1 while services slipped to 56.3 – the lowest score since May. Supply chain constraints hit manufacturing and delivery times for some service businesses. Continuing concerns about the pandemic were blamed for subdued demand growth.
In the UK, the Bank of England’s Monetary Policy Committee voted 9-0 to leave the base rate at 0.1% and decided to maintain its quantitative easing bond-buying programme at £895bn.
However deputy governor Dave Ramsden and external member Michael Saunders voted to stop QE early, by reducing the amount of UK government bonds the bank buys to £840bn from £875bn.
The bank also warned that UK inflation would rise above 4% by the end of this year, due to the energy price shock with soaring gas prices an ‘upside risk’ to its inflation projections in August when it saw inflation hitting 4% by the end of the year.
Policymakers said inflation could remain above 4% into the second quarter of next year, intensifying the cost of living squeeze facing UK households.
In equity news, Evergrande chairman Hui Ka Yan moved to reassure investors after the company’s unit said it had “resolved” a coupon payment on an onshore bond. He said the company, saddled with more than $300bn in debt, would make it a top priority to help retail investors redeem their investment products.
The company faces $83.5m in dollar-bond interest payments due Thursday on a $2bn offshore bond. A $47.5m -bond interest payment is also due next week.
UK parcel and letter carrier Royal Mail gained after it forecast a surge in first-half operating profit as the pandemic-led boom in online shopping drives letter volumes and package revenues.
French car parts company Faurecia rose even as it lowered its main 2021 financial targets due to a sharp reduction in worldwide automotive production. Rival Valeo also gained almost 6.2% to top the Stoxx.
Investec rallied as the wealth manager and banking group raised its earnings outlook driven by strong revenue growth and lower impairments.
Playtech gained after the gambling software developer reported a rise in first-half profit as it said a strong online performance helped to offset longer-than-expected retail closures in Italy.
