Europe midday: Shares go red despite positive EZ, German data

European shares slipped into the red at midday as New Zealand's central bank unexpectedly raised interest rates.

The pan-European Stoxx 600 was down 0.17% at 1045 GMT, with regional bourses mixed. The Reserve Bank of New Zealand lifted rates by 50 basis points instead of the 25 widely expected to a more than 14-year peak of 5.25%, a move contrary to those of other central banks which have been slowing the pace of hikes or pausing as Australia did this week.

“Despite concerns over recession mounting in the manufacturing sector, if one was to look elsewhere, a different trend has been playing out in services, which has been one of steady improvement over the past few months, despite trends in rising prices,” said CMC analyst Michael Hewson.

“While manufacturing has been struggling, and is in large part contracting, services activity has been picking up across the board, whether it be in the US, Europe, or the UK.”

“Energy prices have also been falling, notably petrol prices, as well as that of natural gas, consumers have had more disposable income than expected. This has had the effect of exerting upward pressure on services inflation which is prompting concerns over stickier than expected prices.”

In economic news, the economic recovery in the eurozone continued to gather pace in March, although the picture was mixed across countries, according to a survey released on Wednesday.

S&P Global’s composite output index rose to a 10-month high of 53.7 in March from 52.0 in February. This was below the preliminary estimate of 54.1 but marked the third month in a row that it came in above the 50.0 mark that separates contraction from expansion.

Meanwhile, the final eurozone services business activity index came in at 55.0 in March, also a 10-month high, from 52.7 a month earlier. This was the fastest rate of growth since May 2022 but was a touch below the initial estimate of 55.6.

German factory orders surged by a surprising 4.8% in February against a 0.5% rise in the prior month, according to official data released on Wednesday.

Economists had forecast a 0.3% increase. According to the federal statistics agency, new orders in the capital goods sector jumped by 7.3% in February, the third increase in a row, while intermediate goods orders rose 1.3% and consumer goods 1.9%.

On the equities front, French catering and food services group Sodexo surged after unveiling plans to spin-off and list its Benefits & Rewards Services business during 2024.

Shares in chocolate maker Barry Callebaut fell as the firm appointed a new chief executive and reported a decline in first half sales volumes.

Electronics distributor RS Group fell, despite saying adjusted operating profit would be slightly ahead of expectations.

Engineering firm Wood Group also racked up strong gains after it said late on Tuesday that it would "continue to engage with its shareholders" after private equity firm Apollo Global Management made a fifth and final takeover offer at £1.66bn.

Reporting by Frank Prenesti for Sharecast.com