10.08.202223:40 Forex Analysis & Reviews: European stock market is growing uncertainly

The key exchange indicators of Western Europe showed a slight increase at Wednesday's trading. Market participants refrain from taking decisive steps in anticipation of the release of statistics on July inflation in the United States. In addition, investors continue to analyze quarterly and semi-annual reports of large European companies.

Thus, by the time of writing, the composite index of the leading European companies STOXX Europe 600 increased by 0.06% - up to 436.25 points.

The French CAC 40 rose 0.02%, the German DAX gained 0.2% and the UK FTSE 100 edged up 0.1%.

Leaders of Growth and Decline

The value of securities of the Dutch bank ABN Amro Bank NV increased by 1.8%. In the past quarter, the company's net profit exceeded the forecasts of market analysts.

The stock prices of the Danish manufacturer of wind turbines Vestas Wind Systems soared by 10%. Despite the fact that the company received a larger than expected quarterly loss, the management of Vestas Wind Systems confirmed the annual forecasts.

The market capitalization of the Dutch supermarket chain Ahold Delhaize NV rose by 7.3%. In the second quarter of fiscal year 2022, the company increased its net profit by 12%.

The share price of the German energy concern E.ON SE increased by 0.7%, despite a drop in net profit in the second quarter. At the same time, the company's management announced a tangible increase in revenue, and also confirmed the annual forecast.

In addition, the company reduced the value of its stake in the Nord Stream gas pipeline by about 700 million euros, explaining its decision by the permanent increase in geopolitical tensions between Ukraine and Russia.

The value of securities of the British online food delivery service Deliveroo Plc jumped by 2.7%. In January-June, the company increased its pre-tax loss by 54%, but increased revenue by 12%.

The quotes of the British insurance company Aviva soared by 8.4%. In the first half of the year, the insurer increased its operating profit and raised the amount of dividends.

The market capitalization of the German pharmaceutical company Evotec has collapsed by 10% amid the deterioration of the recommendation for the company's securities by Morgan Stanley economists by two steps at once due to the expected increase in costs.

The share price of the British multinational financial conglomerate Prudential PLC went into negative territory, despite the fact that in January-June, the company's operating profit increased by 8%.

Market Sentiment

The weakly expressed dynamics of key stock exchange indicators in Western Europe on Wednesday is associated with the exciting expectation by investors of data on annual inflation in the United States. The release of this information is scheduled for Wednesday evening.

According to preliminary scenarios of economists, the annual inflation rate in the country fell to 8.7% in July from 9.1% in June (the highest since 1981).

The high concentration of investors on this indicator is due to the fact that based on the final value, the US Federal Reserve will decide on the future course of its monetary policy.

So, if the annual inflation rate turns out to be higher than market forecasts, the US central bank may increase the interest rate again.

On Wednesday, the yield level of two-year US government bonds exceeded the yield of 10-year bonds by almost 50 basis points. This state of affairs, experts are sure, indicates investors' concern about a possible recession in the global economy.

The steady growth of the key indicator of the German stock market on Wednesday is explained by the data published ahead of July inflation in the country. So, in the past month, this indicator coincided with market forecasts and amounted to 7.5%.

UK gross domestic product data for June and the second quarter of 2022 will be published on Friday.

Recall that last Thursday, representatives of the Bank of England warned about the prospects of the UK economy entering a long period of recession in the fourth quarter of 2022.

In addition, the BoE increased the key interest rate by 50 basis points to 1.75% from 1.25% per annum as part of the fight against record inflation. The August rate hike by the central bank turned out to be the sixth in a row, and the rate of its increase became a record since 1995.

Trading Results the Day Before

European stock exchange indicators showed a drop on Wednesday following the negative dynamics of key indicators of the US stock market. According to the results of trading: the Dow Jones fell by 0.18%, the S&P 500 lost 0.42%, and the Nasdaq Composite collapsed by 1.19%

As a result, the aggregate indicator of the leading companies in Europe, the STOXX Europe 600, sank by 0.67% to 435.98 points.

The French CAC 40 declined by 0.53%, the German DAX lost 1.12% and only the British FTSE 100 rose by a symbolic 0.08%.

The value of securities of the German reinsurance company Muenchener Rueckversicherungs-Gesellschaft AG increased by 1.75%. In the second quarter of fiscal year 2022, the company reduced its net profit by 31%, but confirmed the annual forecast for the indicator at the level of 3.3 billion euros.

The quotes of the Czech developer of antivirus software for computers Avast PLC rose by 0.3%. In January-June, the company reduced pre-tax profit by 35%, but increased average revenue per customer by 2.2%.

The market capitalization of the British hotel chain operator InterContinental Hotels Group Plc decreased by 1%, despite the fact that in the first half of 2022 the company significantly increased its net profit, announced a new securities buyback program of up to $500 million, and also resumed the payment of interim dividends.

The share price of the British investment company Abrdn PLC fell by 6.8%. In the first half of the year, the company increased its pre-tax loss and significantly reduced revenue.

The value of securities of the Swiss duty-free goods company Dufry AG soared by 4.1% on the back of a report on high sales dynamics in July. In addition, in January-June, the company's turnover more than doubled.