Europe midday: Shares flat as eurozone retail sales dent sentiment

European shares were flat at midday after worse-than-expected eurozone retail sales dented earlier positive sentiment driven by results from tech giant Apple.

The pan-regional Stoxx 600 had not moved the needle after rising 0.32% in early deals. All major bourses were remained higher however, and US futures indicating a positive start to the final session of the week.

Apple surprised markets with an unexpected rise in iPhone sales amid a global slump in smartphone purchases as consumers start to retrench spending on big-ticket tech items.

Eyes will also be on US labour market data, with non-farm payrolls expected to have increased by 180,000 last month, the smallest increase in nearly 2-1/2 years, although wage growth is expected to have remained strong.

In economic news, retail sales in the eurozone fell by 3.8% in March and an annual basis, worse than the 3.1% forecast as the cost-of-living crisis continues to hit consumer spending power, according to official data released on Friday.

Sales fell 1.2% on a month-on-month basis.

"Retail continues to struggle with the loss of consumer purchasing power and a shift in preference away from goods and towards services, now that the Covid-19 pandemic has ended," said analysts at ING.

Meanwhile, German factory orders also plunged in March, missing expectations and reversing previous gains.

According to the Federal Statistics Office, new orders in manufacturing fell 10.7% month-on-month, and by 11% on March 2022. That compares to a month-on-month increase of 4.5% in February. Analysts had been expecting a far more modest fall, of around 2.2%.

It was the strongest decline since April 2020, at the start of the pandemic.

Investors were also digesting the latest data out of China, showing growth in the services sector was a little weaker than expected in April.

The Caixin services purchasing managers’ index dipped to 56.4 from 57.8 in March, coming in below consensus expectations for a reading of 57.0. Still, it remained above the 50.0 mark that separates contraction from expansion for the fourth month in a row. It also marked the second-highest figure recorded since November 2020.

Wang Zhe, senior economist at Caixin Insight Group, said the reading indicates that services activity is still "undergoing a fast recovery".

On the equities front it was a much quieter day after a deluge of earnings reports and trading statements across the Continent.

Shares in British Airways owner IAG were higher as the company beat forecasts and lifted guidance after reporting a first-quarter operating profit in what is traditionally quiet period for airlines.

Norwegian renewable energy producer Scatec shares were 12% higher after strong results.

Adidas shares jumped after a better-than-expected first quarter, but the German sportswear manufacturer warned 2023 was still set to be "disappointing".

The brand, which has been hit hard after its partnership with controversial rapper Kanye West abruptly ended, said currency-neutral revenues were largely flat year-on-year at €5.27bn in the three months to March end.

Reporting by Frank Prenesti for Sharecast.com