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US stock exchanges returned the European market to steady growth

The leading exchange indicators of Western Europe show a spectacular rise by an average of 1.4-2.8% on Tuesday.

So, at the time of writing, the summary index of the leading companies in Europe STOXX Europe 600 increased by 2.35% – up to 400.02 points.

At the same time, according to the results of July-September, the STOXX Europe 600 indicator decreased by 4.7% and ended in the red for the third quarter in a row. The losing streak for a key stock indicator has become the longest since 2011.

Meanwhile, the French CAC 40 rose 2.76%, the German DAX gained 2.31% and the UK FTSE 100 rose 1.44%.

Growth leaders

The value of securities of the German automobile concern Volkswagen rose by more than 1%. The day before, Volkswagen chief Oliver Blume told local media that he plans to bring all subsidiaries to an IPO after the success of Porsche’s IPO.

Quotes of the Swiss banking group Credit Suisse Group AG soared by 4.5%, recovering from a collapse of 9% the day before. The key factor in pressure on Credit Suisse quotes on Monday was the message from the bank’s management that it is considering the possibility of cutting 1,000 jobs over several years as part of a new anti-crisis program. The business reorganization plan will be presented at the end of October.

The market value of the British insurance company Legal & General Group rose by 4.9% on reports of further support for clients of pension funds affected by a sharp rise in interest rates.

British bakery chain Greggs PLC gained 9.3% on total sales, which rose 14.6% year-on-year in the quarter.

The value of securities of the Swiss manufacturer of vacuum equipment VAT Group AG increased by 6.9%.

Quotes of the French IT company Atos SE rose by 6.8%.

The market capitalization of online furniture retailer Made.Com soared more than 20% on news that management had entered into negotiations with “a number of stakeholders” to sell the company.

Market sentiment

The main factor of the rise for European stock exchanges on Tuesday was the strong results of the last trading session on the US stock market. So, in the first trading session of the fourth quarter, The Dow Jones Industrial Average index rose by 2.7%, reaching a high in February. Meanwhile, the S&P 500 stock index increased by 2.59%, and the NASDAQ Composite – by 2.27%.

Trading results the day before

European stock indicators also closed in the green zone on Monday.

Thus, the aggregate indicator of the leading companies in Europe, the STOXX Europe 600, increased by 0.77% to 390.83 points.

The French CAC 40 gained 0.55%, and the German DAX increased by 0.79%.

The market capitalization of the French construction company Vinci fell by 0.8%, despite the fact that it recently announced the receipt of two contracts for the construction of power lines in Brazil for a total of 1.06 billion euros.

The share price of the British energy giant Genel Energy soared by 3.9% on the company’s announcement of the appointment of Paul Ware as chief executive officer. Since June 2022, Weir has held this position on an interim basis.

Quotes from the Swedish-Swiss manufacturer of electrical equipment ABB, Ltd. collapsed by 7%. The day before, the company’s management announced the completion of the process of separating its division for the production of Accelleron turbochargers into a separate organization.

The value of the securities of Denmark’s largest commercial bank Danske Bank decreased by 8%.

The market capitalization of Danish salmon producer Bakkafrost soared by 8.3%.

The quotes of the Swedish oil and gas company Orron Energy increased by 6.6%.

The share price of the Norwegian oil exploration and development company Aker BP ASA rose by 5.5%.

The focus of European investors’ attention on Monday was the latest statistics on the PMI business activity index in the field of industrial production in 19 countries of the region. So, according to the final S&P estimate, in September this indicator sank to 48.4 points from August’s 49.6 points. At the same time, the September PMI value was the lowest in two years and three months. By the way, the market predicted a drop in the indicator to only 48.5 points.

In the key economy of the eurozone – Germany – the PMI index in the manufacturing industry fell last month to 47.8 from 49.1 points in August. The same French indicator fell in September to 47.7 from the previous 50.6 points. Meanwhile, in Italy, this indicator increased in September to 48.3 points from August’s 48 points.

Disturbing news came on Monday from the UK. So, yesterday morning, the country’s new finance minister, Kwasi Kwarteng, announced the rejection of plans to reduce the top income tax rate. In response to this, the British pound exchange rate, followed by bonds, collapsed sharply.

Recall that last week the UK currency paired with the US dollar updated the historical minimum. Meanwhile, the yield of 10-year British government securities in the course of trading rose to the highest since 2008 – 4,246% per annum. The reason for such loud anti-records was the expectation of tax breaks in the UK.

So, at the end of September, Quasi Kvarteng announced significant tax cuts in addition to measures to provide large-scale support to households in paying electricity bills, which will affect individuals and legal entities and increase the budget deficit by more than 70 billion pounds in fiscal year 2022.

Over the weekend, the country’s Prime Minister Liz Truss tried to defend the plan for a tangible tax cut in the UK, but several senior figures of the Conservative party opposed this step, making the position untenable.

In addition, last weekend, the Russian energy giant Gazprom suspended gas supplies to Italy. Later, representatives of the Italian oil and gas company Eni announced that, according to their expectations, the cessation of gas supplies from Russia will last until Monday.

Last Thursday, the media reported that the Swedish Coast Guard found a fourth gas leak on the damaged Nord Stream pipeline.

EU representatives suspect that sabotage is behind the leaks on Russian pipelines. The day before, the European Union promised to give a tough response to any deliberate violations of the energy infrastructure.

At the same time, on Tuesday evening, the Russian gas monopolist Gazprom announced that it would seek the inclusion of the Ukrainian gas pipeline operator Naftogaz Ukraine in the list of organizations against which Russia has imposed sanctions. Analysts predict that this will lead to the termination of almost all remaining gas supplies to EU countries.

In recent months, the prospects for a decline in energy supplies to Europe have been one of the key reasons for the permanent aggravation of the economic crisis in the region.

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