European shares hold near 3-month highs as business activity slowdown eases

Send a link to a friend  Share

[November 23, 2022]  By Sruthi Shankar

(Reuters) -European stocks were pinned near three-month highs on Wednesday as data showed a downturn in euro zone business activity eased slightly in November, while rallying commodity shares offset losses in Credit Suisse following its profit warning. 

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, November 22, 2022. REUTERS/Staff

The Europe-wide STOXX 600 index inched up 0.1% to its strongest level since Aug. 19. Oil and gas and mining stocks extended gains for a second session, and were up 1.3% each.

Credit Suisse fell 5.1% to the bottom of STOXX 600 after the embattled Swiss lender said it expects to make a pre tax loss of up to 1.5 billion Swiss francs ($1.58 billion) for the fourth quarter.

S&P Global's flash Composite Purchasing Managers' Index (PMI) for the euro zone, seen as a good gauge of overall economic health, nudged up to 47.8 in November from the previous month. Economists were expecting a fall to 47.0 in a Reuters poll.

The survey, however, also showed overall demand continued to decline as consumers cut spending amid a cost of living crisis.

"The PMIs confirm that the European economy is probably already in a technical recession in the fourth quarter but they also show we're stabilising around the low levels and not falling off a cliff," said Christian Stocker, lead equity strategist at Unicredit.

"It is a light recession but nothing dramatic for the earnings."

The benchmark STOXX 600 has rallied about 14% from its September closing lows, aided by a better-than-expected earnings season and expectations that Federal Reserve will slow its pace of rate hikes amid signs of a cooling U.S. economy.

The Fed's November meeting minutes, due at 1900 GMT, will offer fresh clues on the path of interest rates. Traders have currently priced in a 77% chance that the U.S. central bank will hike rates by 50 basis points in December.

The European Central Bank will release its own meeting minutes on Thursday. ECB Vice-President Luis de Guindos said the central bank will keep raising interest rates until it brings inflation down to around its 2% mid-term goal.

Kering slipped 0.8% in choppy trading after a report said Gucci's creative director Alessandro Michele is leaving the Italian fashion house, owned by the French luxury group.

EMS Chemie dropped 3.8% after the Swiss nylon maker cut full-year earnings forecast amid worsening economic outlook.

(Reporting by Sruthi Shankar in Bengaluru; editing by Uttaresh.V and Shinjini Ganguli)

[ 2022 Thomson Reuters. All rights reserved.]
This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.

 

 

Back to top