Europe midday: Stocks advance as investors shrug off weak economic data

22nd Aug 2024 11:07

(Sharecast News) - European stocks were putting in solid gains on Thursday, with the Stoxx 600 index up half a percentage point by lunchtime, as indices resumed their recent upward momentum ahead despite some mixed economic data.

The Stoxx 600 index was up 0.46% at 516.39 by 1217 CEST, with the recent rally pushing the benchmark closer to the record closing high of 524.68 registered in May. The Stoxx 600 Index has now risen in 11 of the past 13 trading sessions, rising more than 6% since 5 August.

Sentiment was helped by gains on Wall Street and Asian indices overnight after minutes from the most recent Federal Reserve policy meeting and a downward revision to labour-market data cemented expectations for an interest-rate cut in September. Attention will now shift to the Federal Reserve's economic symposium in Jackson Hole, Wyoming, on Friday with chairman Jerome Powell expected to speak on the central bank's current opinion of the US economy.

Back in Europe, the composite purchasing managers' index (PMI) for the eurozone improved to 51.2 from 50.2, beating the 50.1 reading expected by analysts. However, data from economic powerhouse Germany painted a worrying picture.

Figures from HCOB released early on revealed that the economic downturn in Germany deepened this month, with the manufacturing PMI contracting more than expected while growth slowed in the services sector. The German overall composite PMI fell to 48.5 in August, from 49.1 in July, missing the 49.2 consensus estimate.

Nevertheless, "Once again, we have seen signs of economic distress from the German manufacturing sector, with the decline to 42.1 marking the lowest point in five months," said Joshua Mahony, chief market analyst at Scope Markets. "While the Paris Olympics helped drive a sharp uptick in French services sector activity, the data seen this morning does help strengthen the rhetoric around a potential weakness within the eurozone economy that the ECB will need to address,"

In the UK, the S&P Global flash PMI composite output index rose to 53.4 from 52.8 in July, hitting a four-month high and coming in above expectations for a reading of 52.9.

Market movers

London-listed sports apparel and footwear retailer JD Sports Fashion was a high riser, jumping 7%. The company said it returned to like-for-like growth in its second quarter, with its store rollout programme in North America and Europe providing a boost, as it maintained its full-year profit outlook.

Swiss insurance giant Swiss Re was also performing well, rising 3% after beating forecasts with second-quarter profits and reiterating guidance for the full year.

German banking group Deutsche Bank gained 3% after reaching a deal with a large share of Postbank shareholders in a long-running legal case about the price paid for the rival bank during a 2008 takeover.

Also in Frankfurt, ticket service provider CTS Eventim jumped 7% after growth picked up in the second quarter, prompting a guidance upgrade.

The heavy faller on the Stoxx 600 was Danish group GN Store Nord, as the hearing aids, speakerphones, videobars and headsets maker underwhelmed with its second-quarter results, causing the stock to drop 9%.