Stock Market

European equities climb marginally; strong factory orders reported in Germany

On Wednesday, European stock markets experienced slight gains, largely thanks to the positive German industrial orders release, although risk sentiment remained uncertain. At 03:35 ET (07:35 GMT), the DAX index in Germany traded flat, while the CAC 40 in France climbed 0.1%, and the FTSE 100 in the U.K. rose 0.2%. Trading ranges are predicted to be narrow in Europe as a long weekend approaches, but the market sentiment was lifted by data released early Wednesday that showed German industrial orders had surged 4.8% in February, which offered hope for the region’s beleaguered manufacturing sector.

Moreover, French industrial production in February rose 1.2% in the month, ahead of the expected 0.5% growth, and a significant improvement from the revised drop of 1.4% the prior month. However, the manufacturing sector in Europe has not been performing as well as services throughout the continent, which has made risk sentiment remains delicate as investors remain wary about the possibility of recessions on both sides of the Atlantic.

On Tuesday, the JOLTS report in the US showed that job openings had dropped to their lowest level in nearly two years in February. Furthermore, data also showed that the US manufacturing sector sank deeper into contraction in March. In Europe, Monday’s manufacturing activity data revealed that factories had struggled across the eurozone last month as consumers felt the pinch of rising living costs.

Investors are debating whether the Federal Reserve will pause its rate-hiking cycle next month, but the European Central Bank could still increase interest rates by a substantial 50 basis points in May as it battles rising underlying inflation. The main focus on Wednesday was the release of the final Eurozone purchasing managers’ index data for the services sector in March, which was expected to show continued expansion.

In the corporate sector, Sodexo (EPA: EXHO) stock soared almost 9% after announcing plans to spin off and list its Benefits & Rewards Services business during 2024. Meanwhile, Barry Callebaut’s (SIX: BARN) stock fell 2% after reporting a decline in first-half sales volumes and appointing Peter Feld as its new chief executive. H & M Hennes & Mauritz (ST: HMb) stock rose 0.8% after Morgan Stanley upgraded its investment stance on the fast fashion giant to ‘equal-weight’ from ‘underweight,’ citing margin improvements that helped offset weaker top-line growth. Direct Line (LON: DLGD) stock climbed 4.5% after Citigroup upgraded the UK insurer all the way to ‘overweight’ from ‘underweight,’ arguing that the sharp selloff that followed its profit warning in January had gone too far.

Furthermore, oil prices rose on Wednesday with industry data revealing a fall in US crude inventories, which helped extend a rally prompted by the weekend’s unexpected OPEC+ output cut. By 03:35 ET, US crude futures traded 0.2% higher at $80.84 a barrel, while the Brent contract climbed 0.3% to $85.19. Gold futures also rose 0.2% to $2,042.25/oz, while EUR/USD traded 0.1% higher at 1.0960.

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