LONDON (SHARECAST) - -Corporate results continue negative balance
-Eurozone services and manufacturing contract more than expected
-German business confidence registers surprise drop
-China manufacturing PMI moves towards expansion
-Greek coalition fails to reach agreement on Troika demands
FTSE Mibtel 30: +0.82%
Ibex 35: +0.57%
Stoxx 600: +0.42%
European equities rebounded slightly after yesterday’s 2% sell-off as corporate earnings continued to disappoint and signs of the deterioration in the Eurozone economy negated the positive data out overnight from China.
Acting as a backdrop, investors were also hesitant to make big trades while waiting for the US Federal Reserve to come out with its monetary policy statement after the European market close, at 19:15 London time. While the experts expect little news to come out of the Fed, they will closely be watching changes to the statement that will reflect the monetary authority’s current view on the US economy.
Results undershoot expectations
The balance of earnings reports is clearly negative today.
Volvo , Heineken and Nordea Bank all published disappointing numbers.
On the bright side, SAP beat consensus and upped its full-year revenue guidance.
From a sector stand-point the best performance on the DJ Stoxx 600 was to be seen in the following industrial groups: Technology (+2.47%), Basic Resources (+1.03%) and Automobiles (+0.76%). Leading the declines: Insurance (-0.24%), Retail (-0.07%) and Personal & Household Goods (-0.02%).
Eurozone data shows deterioration
Eurozone services and manufacturing output registered a larger-than-expected contraction in October. The composite index hit a more than three year low at 45.8 when analysts were forecasting a slight rise from September’s 46.1 to 46.5.
German business confidence fell to lowest level since February 2010, according to the IFO Institute. It was another surprise drop as the reading fell to 100.0 from the prior 101.4 and settled below 101.6 consensus estimate.
The HSBC preliminary reading for China’s manufacturing PMI (purchasing manager’s index) for October rose to a three month high of 49.1. A reading of 50 or above shows growth, while below indicates contraction.
Single currency drifts lower
The euro/dollar is now down by 0.16% to the 1.2960 dollar mark.
Front month Brent crude futures are now up by 0.595 dollars, to the 107.66 dollar mark on the ICE.