Europe close: Stocks edge higher as investors digest macro data

14th May 2024 15:22

(Sharecast News) - After a flat start, European stocks pulled into positive territory by the close on Tuesday, pushing the Stoxx 600 index to another record close, as markets rallied for the eighth day straight.

The pan-European Stoxx 600 finished 0.2% higher at 521.79, a new record closing high, having now gained 3.7% since 2 May. Indices in London and Paris rose just 0.2%, while Milan surged 1% and Madrid gained 0.8%, partially offset by a small fall in Frankfurt.

Economic data was in focus on Tuesday, with stats from the UK showing that the jobless rate ticked higher in April to 4.3% while private-sector wage growth softened, adding to rising expectations that the price pressures are softening.

The Bank of England's chief economist Huw Pill said an interest-rate cut this summer was on the table. Pill said that Bank has made progress on bringing inflation down to the 2% target, which he expects it to reach in the second quarter, though the MPC has to evaluate two inflation releases and another labour-market report before its next policy decision in June.

In Germany, investor sentiment kicked higher in May, a closely-watched survey showed on Tuesday, reaching a two-year high. The latest ZEW Indicator of Economic Sentiment came in at 47.1, a 4.2-point increase on April and the highest level since February 2022, beating the 46.0 consensus forecast.

Wall Street stocks opened flat following stronger-than-expected wholesale inflation data and comments from Federal Reserve chair Jerome Powell, who reinforced the central bank's approach to wait and see regarding incoming economic data before making any changes to interest rates.

Regarding stronger-than-expected inflation readings in the first quarter, Powell said: "We did not expect this to be a smooth road, but these were higher than I think anybody expected." He said the central bank would "need to be patient and let restrictive policy do its work".

Meanwhile, the annual rate of US producer price inflation rose to its highest level in a year in April, picking up to 2.2% from a downwardly revised 1.8% increase the month before. US consumer price inflation stats will be in focus on Wednesday, with forecasts for a slight decline in the headline annual rate to 3.4% in April from 3.5% in March.

Italian banks outperform, Delivery Hero surges

Strong gains in the Italian banking sector gave Milan's FTSE MIB a big lift, with BPER Banca, Banca MPS, Banco BPM and Intesa Sanpaolo all rising at least 2% each.

Shares in Delivery Hero surged after it agreed to sell its Foodpanda delivery business in Taiwan for $950m to Uber. The stock finished up 26%.

German arms manufacturer Rheinmetall fell nearly 3% after sales and profit in the first quarter missed expectations.

UK-listed miner Anglo American fell 4% after the board rejected a second takeover offer from BHP Group and unveiled plans to break up the company to focus on its copper, premium iron ore and crop nutrients operations, with plans to offload coal mining, nickel, platinum and De Beers diamond operations.

Vodafone gained 5% after reporting better-than-expected full year cash flow, and a return to growth at its troubled German division.

Shares in Veolia rose 2% after the French waste and water management company met first-quarter core profit expectations, buoyed by a strong performance in its water technologies unit and synergies with Suez.

Brenntag slumped 8% as the German chemicals distributor missed first-quarter operating profit forecasts as it blamed price pressures and lower-than-expected demand in some markets and industries