Europe midday: Stocks a little weaker as German data disappoints

by | Jul 6, 2021

European stocks were still in the red by midday on Tuesday, with German shares underperforming after disappointing factory orders.
The benchmark Stoxx 600 index was steady at 458.37, while France’s CAC 40 was 0.3% lower at 6,552.28 and Germany’s DAX fell 0.4% to 15,606.53 after figures released by Destatis showed German factory orders unexpectedly slumped in May amid weakness in the auto sector.

Factory orders fell 3.7% on the month following a 1.2% increase in April, missing expectations for a 0.9% rise. On the year, factory orders rose 54.3% in May following an 80.2% jump the month before and versus expectations for a 59.4% increase.

Compared to February 2020, a month before Covid-related restrictions kicked in, order intake in May was 6.2% higher. Compared to May 2020, which was “very badly” affected by the pandemic, order intake rose 54.3%.

“The unexpected decline in factory orders marks the steepest since the first lockdown and highlights the uneven nature of the global economic recovery as supply-chain issues persist,” said Oanda market analyst Sophie Griffiths.

There was more bad news for Germany in the form of the latest ZEW survey. The investor expectations index fell to 63.3 in July from 79.8 in June, coming in well below consensus expectations for a reading of 75.2.

Pantheon Macroeconomics said: “Today’s ZEW matches yesterday’s Sentix, indicating that expectations are now softening, even as current conditions improve. The headline decline pulled expectations down to a six-month low, while the current situations index jumped to a 29-month high go 21.9, from -9.1 in June.

“Soaring current assessment amid falling expectations usually isn’t a good sign in these data, indicating that the good news is all but priced in.”

On the corporate front, Alstom slumped after the French train maker said it expects significant negative cash flow this year.

Elsewhere, London-listed online supermarket Ocado rose after it said first-half losses narrowed as retail revenue rose during further Covid-19 restrictions in the UK. The pre-tax loss for the six months to the end of May was £23.6m compared with £40.6m a year earlier as group revenue rose 21.4% to £1.32bn.

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