Europe open: Shares flat as NZ surprises with rate hike; Sodexo surges

European shares were flat at the open on Wednesday after mixed sessions on Wall Street and in Asia and as New Zealand's central bank unexpectedly raised interest rates.

The pan-European Stoxx 600 had barely moved the needle in early deals, with regional bourses following suit. 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, 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.

Reporting by Frank Prenesti for Sharecast.com