Europe close: Markets finish flat as earnings optimism fades

European stock markets gave up earlier gains to finish or less flat on Thursday as earlier optimism surrounding a raft of upbeat corporate earnings quickly faded.

The Stoxx 600 settled just 0.14 points or 0.03% higher at 518.98, after rising as much as 0.7% to a high of 522.51 by mid-morning, with all major markets across the continent trimming gains by the close of play.

It was the index's first day in positive territory (albeit marginal) in four trading sessions, as market sentiment is dominated by rising political uncertainty ahead of the US elections, and nervousness around the future path of monetary policy worldwide.

"This election is too close to call, and the prospect of no clear winner cannot be ruled out," said Kathleen Brooks, research director at XTB. "The market may be pricing in a higher chance of a rate cut from the Fed in November, partly because no clear outcome from this election could hit economic sentiment and weigh on economic growth, forcing the Fed into more rate cuts."

Meanwhile, London's FTSE 100, which rose by nearly 1% earlier in Thursday's session, finished just 0.1% higher as nerves started to set in ahead of next week's Autumn Budget statement by the Labour Party.

"The FTSE 100 has spent weeks trying to rally, but to no real effect. Just as the US election hangs over Wall Street, so UK investors have decided to sit things out until [chancellor] Rachel Reeves finishes talking next week," said Chris Beauchamp, chief market analyst at IG.

PMIs show mixed activity

A barrage of purchasing managers' indices (PMIs) from across the globe were in focus on Thursday.

The flash reading of the eurozone composite PMI edged higher to 49.7 from a seven-month low of 49.6 in September, meeting consensus forecasts. Service-sector growth slowed unexpectedly, but the decline in manufacturing wasn't as bad as feared. "The eurozone is stuck in a bit of a rut," said Cyrus de la Rubia, chief economist at HCOB, which conducted the survey.

In the UK, the flash composite PMI fell to an 11-month low of 51.7 from 52.6 in September, in line with analysts’ expectations. Chris Williamson, chief business economist at S&P Global Market Intelligence, said that "gloomy government rhetoric and uncertainty ahead of the Budget has dampened business confidence and spending".

In the US, the flash composite PMI increased to 54.3 this month, up from 54.0 in September, signalling a "further solid rise in business activity to mark a robust start to the fourth quarter", S&P Global said.

European earnings impress

Swedish online casino operator Evolution Gaming surged 15% after delivering third-quarter results ahead of analysts' expectations. Revenues were up 21% at €549m, while EBITDA jumped 30% to €415m, smashing the €354m estimate.

London-listed IT infrastructure services provider Softcat was also up 11% after impressing with its annual results, which showed "another year of strong growth and cash generation". The company revealed a special dividend payment, alongside a 6.4% increase in the full-year dividend.

Indivior was also a high riser, up 5% as the UK-listed pharma firm reassured investors by holding on to its full-year forecasts following a recent profit warning.

Renault surged 5% after reporting a 1.8% rise in third-quarter revenue to €10.7bn, surpassing analyst forecasts, driven by strong demand for new models like the Symbioz and Dacia Duster hybrid SUV.

Results from UK banking group Barclays also pleased investors, with shares up 4%. The bank nudged up its net interest income guidance for the full year after a solid third quarter, and said it was on track to deliver on its short and medium-term financial metrics.

Also higher was French fashion and accessories giant Hermès after managing to grow quarterly sales by 11% despite the wider luxury-market slowdown, with double-digit growth recorded in every region except Asia-Pacific when excluding Japan. Other luxury stocks such as Moncler, Kering and Burberry also rose on the news.

Leading the fallers was French vouchers and benefits cards firm Edenred, tumbling 15% after warning that potential regulatory changes in Italy – namely a 5% cap on meal voucher commissions paid by merchants – could hit EBITDA by €60m in 2025 and €120m on an annual basis going forward.