Europe open: Shares up as UK enters recession; Fortnox surges
European stock markets were higher at the open, despite the UK entering a technical recession on the day the beleaguered ruling Conservative Party faced two by-elections.
The pan-regional Stoxx 600 index was up 0.55% to 487.89 at 0810 GMT with all major Continental bourses higher.
Britain’s FTSE 100 was up 0.49% in early deals as the domestic economy contracted by 0.3% in the final quarter of 2023, pushing the country into a technical recession after third-quarter growth was revised down to -0.1%.
The Conservatives are facing defeat in Wellingborough, vacated after allegations of misconduct by the now former MP Peter Bone, and Kingswood, where Chris Skidmore quit in protest at the UK government's decision to issue more oil and gas licences.
"Given the monetary screws have been turned so tight, at a time when inflation has battered many people’s finances, it’s not surprising that consumers recoiled from spending, helping push the UK economy into recession," said Hargreaves Lansdown analyst Susannah Streeter.
"In December shoppers refrained from festive excesses, pulled purse strings tighter while strikes by junior doctors knocked health output. Activity on construction sites also fell back by 0.5% with downpours likely to be partly to blame."
"It seems clear that national resilience in the face of higher interest rates and painful borrowing costs has finally buckled. Even though the official recession recognition was expected, confirmation has pushed down the pound slightly, as pessimism about the UK’s prospects spreads. Sterling was trading at $1.255, dipping 0.12%."
In equity news, Swedish business cloud platform Fortnox surged by 23% after reporting strong quarterly results.
French auto giant Renault made strong gains after lifting its dividend rise and reiterating a target of double-digit operating margins by 2030.
Centrica was up despite lower earnings for the UK oil and gas company and owner of British Gas.
French spirits maker Pernod Ricard also rose despite forecasting flat sales this year, although it was betting on improved demand in key Chinese and US markets from the second half.
Reporting by Frank Prenesti for Sharecast.com