On Monday, European stock markets went up a little bit, thanks to some good corporate earnings. However, the gains looked like they might be short-lived after weak German retail sales data raised new questions about the region’s economic recovery.
By 4:05 a.m. ET (8:05 a.m. GMT), the DAX in Germany was up 0.3%, the CAC 40 in France was up 0.4%, and the FTSE 100 in the U.K. was up 0.5%.
European stock markets started the new month with a bit of optimism. The banking sector led the way after HSBC (LON:HSBA), the region’s biggest bank, raised its near-term return on tangible equity goal to at least 12% from 2023 onwards and promised to start paying quarterly dividends again the following year. Its stock went up by more than 6%.
The bank also said no to the idea of separating or spinning off its Asian business, saying that doing so would have huge one-time costs, higher taxes, and ongoing costs.
Even though inflation hurt, Pearson (LON:PSON) stock went up by more than 6% after the publishing giant easily beat profit expectations in the first half of this year.
Heineken’s (AS:HEIN) first-half earnings were better than expected because consumers bought more beer from the world’s second-largest brewer after lockdowns were lifted. However, the company’s stock dropped 1 percent because it lowered its margin target for 2023 because costs were rising faster than expected.
Still, gains aren’t very big in Europe because investors are worried that the region might go into a recession because of bad economic data.
In June, German retail sales fell by 8.8% compared to the same month last year, and by 1.6% compared to the month before. This was the biggest annual drop in decades. On a month-to-month basis, sales fell by 1.6%. Since 1994, when Destatis began collecting data on retail sales across all of Germany, this was the biggest drop in one year.
Also, factory activity in the Eurozone decreased in July. The region’s manufacturing PMI index dropped to 49.8 from 52.1 the month before, because of inflationary pressures and macroeconomic uncertainty.
This is because of the weakness in Asia, where factory activity fell in South Korea for the first time in almost two years, grew slowly in Japan for the first time in 10 months, and unexpectedly fell in China in July due to new COVID-19 outbreaks, according to the official measure of factory activity that was released over the weekend.
Oil prices mostly went down on Monday after China’s manufacturing PMI dropped by more than expected. This made people worry that crude oil demand in the world’s biggest importer might be slowing.
This week, all eyes will be on the Organization of Petroleum Exporting Countries and their allies, who make up a group called OPEC+. On Wednesday, OPEC+ will meet to talk about the future supply of oil.
At 4:05 AM ET, the price of a barrel of U.S. crude futures was down 0.6% to $98.08, while the price of a barrel of Brent futures was flat at $104.00.
Gold futures fell 0.1 percent to $1,779.80/oz, while the EUR/USD rose 0.2 percent to 1.0237.
