Forex Analysis & Reviews: 02.03.2023 - European stock markets show...

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02.03.2023 02:21 PM

European stock markets show declines

Yesterday, European stock exchanges closed mostly with declines. The exception was the FTSE 100 index, which rose by 0.49%. All other indices dropped. The DAX index fell by 0.39%, the CAC 40 index decreased by 0.46%, the FTSE MIB lost 0.59%, and the IBEX 35 index slumped by 0.76%. The composite STOXX Europe 600 was down by 0.74%.

European indicators dropped after the release of the latest statistical data on inflation in Germany. According to last month's results, the growth in consumer prices in the country increased to 9.3% from January's level of 9.2%. This indicator exceeded the forecasts of experts, who projected a reduction of 9%.

In addition, France and Spain posted an upsurge in consumer prices over the past month.

Today, the statistical data for all eurozone countries will be published. According to the preliminary forecast, consumer price growth over the past month is expected to decrease to 8.2% from the January level of 8.6%, as well as core inflation is forecasted to maintain at 5.3%.

Skyrocketing inflation is causing fears among investors about a further increase in interest rates by the European regulator more than previously expected. According to analysts' forecasts, the interest rate is expected to rise by 0.5% this month from the current level of 2.5%. In the future, the rates may soar to 4% by February next year.

Another factor was the eurozone manufacturing PMI which dropped to 48.5 from 48.8 on a monthly basis. At the same time, this indicator was in line with preliminary forecasts.

At the same time, the growth of the UK manufacturing PMI was promoted by the release of the latest statistical data from China, which indicate the recovery of the country's economy as a result of the easing of restrictions since the beginning of 2023. In China, the industrial and service sectors expanded.

Among the British FTSE 100 companies, Rio Tinto rose by 4.6%, Glencore gained 3.5%, Anglo American increased by 3.3%, as well as BHP Group added 2.3%. All companies listed above demonstrated the highest gains.

The stocks of European companies were trading mixed. Thus, Siemens AG gained 0.4% due to the company's announcement about the creation of a new company Innomotics, which will start operating independently on July 1, 2023. This division will be engaged in the production of various types of engines and converters.

By contrast, Puma SE fell by 6.8% due to a more than five-fold drop in net profits in the last quarter to €1.4 million, while revenues rose by 24% to €2.2 billion.

In addition, the company's gross margin dropped to 44% as a result of higher promotional costs for products that need to be sold to make room in warehouses.

Just Eat Takeaway.com NV declined by 3.2% due to a sharp increase in net losses last year, which was the result of large write-downs totaling €4.6 billion after the revaluation of previously acquired assets.

On the contrary, Aston Martin Lagonda rose by 3.2%, despite the company's report of a 2.3-fold increase in the company's loss last year. One of the reasons for this was the weakening of the British currency against the US dollar.

Beiersdorf decreased by 0.5%, despite the increase in revenues last year by 10.2%, to €8.8 billion. At the same time, the company predicts a decline in sales growth this year.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.