Europe close: Stocks end the session higher, outside of the German Dax
Most of Europe's main stock market indices shares rallied from early losses as investors braced themselves for the never-ending deluge of corporate news and a policy meeting of the US Federal Reserve later in the week.
Germany's Dax was the exception with gains cut short after news broke late in the day that Gazprom had cut its natural gas supplies to Germany through the Nord Stream 1 pipeline by half.
"While gas does flow into Germany via the Nord Stream 1 pipeline once again, it appears that the pre-maintenance 40% flow level has now dropped to just 20% in a fresh knock an already troubled German economic outlook," said IG senior market analyst Joshua Mahony.
The pan-European Stoxx 600 index edged up 0.13% to 426.25 with all major continental bourses higher, save the Dax which slipped 0.33% to 13,210.32.
TTG natural gas futures spiked 19% on the news out of Russia to reach $179MWh, but the euro and longer-term euro area periphery government bond yields were steady.
Economists are expecting a 75 basis interest rate hike by the US central bank. The European Central Bank last week brought in a 50 basis point increase, larger than previously suggested.
Hawkish ECB policymaker Robert Holzmann told an Austrian broadcaster on Sunday that the Governing Council will consider the economic landscape across the euro zone before determining whether another big rate hike will be feasible in September.
“It is a busy week for the market with a slew of earnings, the Fed’s interest rate decision and US GDP figures,” said Interactive Investor head of investment Victoria Scholar.
"[...] Aggressive action from the Fed to combat inflation could add to pressures on the global economy and reduce global energy demand, particularly if it induces a US recession.”
In Germany a survey released by the Ifo Institute, said the country was on the brink of recession.
The survey found that business sentiment deteriorated significantly in July amid surging energy prices and worries about gas supply. The business climate index fell to 88.6 from 92.2 in June, hitting its lowest point since June 2020.
The expectations sub-index slumped to 80.3 in July from 85.5 in June.
Ifo president Clemens Fuest said: "Higher energy prices and the threat of a gas shortage are weighing on the economy. Germany is on the cusp of a recession."
In equity news, Philips shares plunged after the Dutch medical equipment company missed second-quarter core earnings expectations by a significant margin and cuts full-year and mid-term profit outlook.
Verbund shit higher after Barclays upgraded the Austrian electrical company’s shares to “overweight.”
Budget airline Ryanair was up after swinging to a profit in the first quarter as traffic recovered, but did not provide any guidance for the year given the "fragile" air travel market.
The company swung to a profit after tax of €170m in the first quarter from a loss of €273m in the same period a year earlier. However, this was well below the €243m reported in the first quarter of FY20, before the pandemic struck.