Europe midday: Strong earnings propel markets higher
European stocks snapped a three-day losing streak as a raft of better-than-expected corporate earnings distracted investors from a mixed bag of economic data.
"Risk sentiment is higher on Thursday as earnings data and retreating bond yields lift equities," said Kathleen Brooks, research director at XTB.
By 1311 CEST, the Stoxx was up 0.6% at 521.77, with most major benchmark indices across the continent putting in solid gains.
The pan-European benchmark had been falling since hitting a four-week high of 524.99 on Friday – its highest close since reaching a record of 528.08 on 27 September – on the back of rising political uncertainty ahead of the US elections, and nervousness around the future path of monetary policy worldwide.
"This election is too close to call, and the prospect of no clear winner cannot be ruled out. The market may be pricing in a higher chance of a rate cut from the Fed in November, partly because no clear outcome from this election could hit economic sentiment and weigh on economic growth, forcing the Fed into more rate cuts," Brooks said.
PMIs point to subdued activity
A barrage of purchasing managers' indices (PMIs) from across the globe were in focus on Thursday.
Out first was the flash reading of the eurozone composite PMI, which edged higher to 49.7 from a seven-month low of 49.6 in September, meeting consensus forecasts. Service-sector growth slowed unexpectedly, but the decline in manufacturing wasn't as bad as feared. "The eurozone is stuck in a bit of a rut," said Cyrus de la Rubia, chief economist at HCOB, which conducted the survey.
In the UK, the flash composite PMI fell to an 11-month low of 51.7 from 52.6 in September, in line with analysts’ expectations. Chris Williamson, chief business economist at S&P Global Market Intelligence, said that "gloomy government rhetoric and uncertainty ahead of the Budget has dampened business confidence and spending".
Later in the US, the flash composite PMI is forecast to remain unchanged at 54 for October, matching September's five-month low. Also due for release in the States will be jobless claims, new home sales, and manufacturing gauges in Chicago and Kansas.
European earnings impress
Swedish online casino operator Evolution Gaming surged 13% after delivering third-quarter results ahead of analysts' expectations. Revenues were up 21% at €549m, while EBITDA jumped 30% to €415m, smashing the €354m estimate.
London-listed IT infrastructure services provider Softcat was also up 13% after impressing with its annual results, which showed "another year of strong growth and cash generation". The company revealed a special dividend payment, alongside a 6.4% increase in the full-year dividend.
Indivior was also a high riser, up 10% as the UK-listed pharma firm reassured investors by holding on to its full-year forecasts following a recent profit warning.
Renault Group surged 7% after reporting a 1.8% rise in third-quarter revenue to €10.7bn, surpassing analyst forecasts, driven by strong demand for new models like the Symbioz and Dacia Duster hybrid SUV.
Results from UK banking group Barclays also pleased investors, with shares up 4%. The bank nudged up its net interest income guidance for the full year after a solid third quarter, and said it was on track to deliver on its short and medium-term financial metrics.
Also higher was French fashion and accessories giant Hermès after managing to grow quarterly sales despite the wider luxury-market slowdown, as it was able to shrug off weak demand in China. Hermès reported third-quarter revenues of €11.21bn, up 11.4% with double-digit growth recorded in every region except Asia-Pacific when excluding Japan.
Leading the fallers was French vouchers and benefits cards firm Edenred, tumbling 13% after warning that potential regulatory changes in Italy – namely a 5% cap on meal voucher commissions paid by merchants – could hit EBITDA by €60m in 2025 and €120m on an annual basis going forward.