Europe midday: Stocks lifted by inflation slowdown in UK and US

by | Nov 15, 2023

(Sharecast News) – European stocks were performing well on Wednesday as investors assessed what drops in US and UK inflation mean for the future of monetary policy.
However, closer to home, data on the continent was less pleasing, with eurozone industrial output slumping more than forecast and economic forecasts being slashed by the European Commission.

By 1234 CET, the Stoxx 600 index was up 0.6%, with decent gains across most major indices, with the exception of Madrid’s Ibex 35 which rose just 0.1% owing to weakness in the banking, utility and telecoms sectors.

Expectations were rising that the Federal Reserve and Bank of England may be hold off from any further monetary tightening after inflation in the US and UK eased more than expected in October.

The S&P 500 and Nasdaq put in their best daily performances since April on Tuesday, jumping 1.9% and 2.4%, respectively, while London’s FTSE 100 was outperforming its European counterparts on Wednesday morning, rising 1%.

Meanwhile, markets across Asia surged overnight too, after Chinese retail sales and industrial production grew more than predicted in October, while market chatter highlighted the possibility of further stimulus measures for the Chinese housing sector. The Hang Seng index rose nearly 4%, while the Nikkei 225 gained 2.5%.

It wasn’t all good news though. Data out on Wednesday showed that eurozone industrial production dropped by 1.1% in September, after a 0.6% increase in August, coming in below the predicted 0.7% decline.

The Eurozone Commission also cut its GDP forecasts for the single-currency area, saying that growth had lost momentum on the back of the high cost of living, weak external demand and elevated interest rates. The Commission now expects GDP growth of 0.6% for this year and 1.2% in 2024. This is 0.2 percentage points below the summer forecast.

Siemens Energy and Experian jump

Munich-based energy tech giant Siemens Energy saw shares surge 5% despite reporting a €4.6bn full-year net loss on Wednesday. The company said it was reviewing the structure of its wind turbine division, Siemens Gamesa, but managed to secure a €12bn credit line from lenders, with the German government providing a loan guarantee.

In London, data services specialist and consumer credit ratings firm Experian delivered a solid set of first-half results with all regions contributing positively to growth, as it reiterated its guidance for the full year. The stock rose 7% despite an in-line set of results. Analysts at Shore Capital said, after the recent warning from sector peer TransUnion which last month reported weak quarterly figures and cut its full-year outlook, Experian’s results “will come as a relief to many”.

In Madrid, falls from banking peers Banco de Sabadell and Bankinter were weighing on the Ibex, along with weakness among defensive stocks like utilities groups Naturgy Energy and Iberdrola, and telecoms names Telefonica and Cellnex.

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