Europe close: Stocks finish higher even after 'grim' German factory data
Stocks on the continent were higher at the end of the day on Thursday, as investors looked to Friday's monthly US jobs report and digested what one analyst in the City termed an "unequivocally grim" report on German factory orders.
The pan-European Stoxx 600 was up 0.44% at 425.48, as Germany’s DAX last added 0.72% to 13,574.82 and the CAC 40 in Paris rose 0.88% to 6,038.18.
In Madrid, the IBEX 35 was ahead 0.96% at 9,811.30, and Milan’s FTSE MIB was 1.05% firmer at 24,490.35, while in London, the FTSE 100 rose 0.3% to 7,504.79.
In currencies, the euro was last 0.19% weaker against the dollar at $1.0978, but gained 0.3% on sterling to 84.86p.
“US markets are back at record highs, while the Dax seems prepared to follow suit, even if it is displaying further caution around the 13,600 mark, the peak of the past two years," said IG's chief market analyst Chris Beauchamp.
"Some of the strength in European markets will be down to the utterly abysmal performance of the euro this week, which has conspicuously failed to follow up on the strength displayed at the end of January, and has instead fallen right back to $1.10.”
In the background, German factory data for December surprised sharply to the downside, falling at a month-on-month pace of 2.1%, instead of rising by 0.6% on the month as expected by analysts, as orders from overseas slumped by an outsized 4.5%.
“This is an awful headline, even factoring-in the punchy upward revision to the November data,” said Pantheon Macroeconomics’ chief eurozone economist Claus Vistesen.
“We had expected closer to a 2% m/m gain, in line with surveys pointing to a marginal improvement in the year-over-year rate; instead, the annual growth rate just hit a post-crisis low.
“The main drags came from sharp declines in new orders for capital and consumer goods…mainly to other eurozone economies.”
Looking ahead, Vistesen said he was confident that mean reversion would boost the month-on-month headline “significantly” in the January report, though that jump would be difficult to cheer in light of the risk of a coronavirus hit through the latter part of the first quarter.
“Meanwhile for the fourth quarter as a whole, base effects already are beginning to lift the run-rate.
“New orders fell by 'just' 0.6% quarter-on-quarter, better than the 0.8% slide in the third quarter, though this doesn’t make us particularly optimistic for the near-term output data.”
In equity markets, Deutsche Bank was among the top performers, with news that it had clinched its first new major shareholder in over a year - US outfit Capital Group - pushing its shares to a new 52-week high earlier in the session.
Its stock was last up 13.52% in Frankfurt.
Shares of Nordea Bank and Unicredit were rising alongside, by 6.97% and 8.15% respectively, with the latter's fourth quarter revenues of €4.9bn handily beating analysts' expectations.
On the downside, Swedish retailer ICA Gruppen was one of the worst performers, falling 7.16% after it posted a 1.6% dip in its fourth quarter profits to SEK 915.0m.