European stocks rise to record level, boosted by generally positive earnings

Published 08/05/2024, 08:22
Updated 08/05/2024, 10:32
© Reuters
- - European stock markets rose Wednesday, climbing to record highs, as investors digested generally positive quarterly corporate earnings.

At 05:20 ET (09:20 GMT), the DAX index in Germany traded 0.5% higher, the CAC 40 in France traded 0.9% higher and the FTSE 100 in the U.K. climbed 0.4%.

Additionally, the pan-European STOXX 600 index climbed 0.4%, to a record high, following Tuesday's more than 1% jump.

AB Inbev backs full-year guidance

The quarterly earnings continued apace Wednesday, with largely positive results boosting sentiment.

Anheuser Busch Inbev (EBR:ABI) stock rose 4.7% after the world’s largest brewer said its volumes dropped by less than expected in the first quarter, and backed its guidance after saying that the three-month performance was encouraging.

Siemens Energy (ETR:ENR1n) stock rose 12% after the German company raised its full-year outlook for sales, operating profit and free cash flow, while reporting its second-quarter profit before special items rose more than fourfold.

Siemens Energy also announced plans to replace the boss of its troubled wind turbine division, also flagging job and capacity cuts as it tightens its grip on the loss-making business.

On the flip side, BMW (ETR:BMWG) stock fell over 3% after the German auto giant said it expects a slight drop in pretax profit this year due to higher research and development, manufacturing and personnel costs, after reporting a fall in its first-quarter profit margin in its automotive segment.

German economy remains weak

German industrial production declined in March, according to data released earlier Wednesday, providing more reason for the European Central Bank to start a rate-cutting cycle in the near future.

Industrial production fell in March by 0.4% compared to the previous month, after having increased by 1.7% in February on the month, less than the 2.1% before the revision of the data.

Demand in manufacturing remains weak. German industrial orders fell by 0.4% month-on-month in March, data showed on Monday.

The ECB has signaled a rate cut in June, and much of traders’ attention is on the Fed outlook, given the current uncertainty over when the U.S. central bank will start cutting interest rates.

Minneapolis Fed boss Neel Kashkari suggested on Tuesday that stubborn inflation and a robust economy could prevent a rate cut from happening this year.

A number of his colleagues are set to speak later Wednesday, including Vice Chair Philip Jefferson, Governor Lisa Cook and Boston Fed President Susan Collins.

Crude slips lower after increase in US stockpiles

Crude prices retreated Wednesday as industry data showed an increase in  U.S. crude inventories, a sign of weak demand in the world’s largest energy consumer. 

By 05:20 ET, the U.S. crude futures traded 1.7% lower at $77.05 per barrel, while the Brent contract dropped 1.6% to $81.86 per barrel.

Data from the American Petroleum Institute showed on Tuesday that U.S. oil inventories grew 0.5 million barrels in the week to May 3, coming in ahead of expectations for a draw of 1.4 million barrels.

Official U.S. government data on stockpiles from the Energy Information Administration are due later in the session.

Meanwhile, Israel kept up its offensive against Rafah in southern Gaza on Tuesday, the day after Hamas officials reportedly accepted a new ceasefire proposal.

Still, U.S. officials said a ceasefire could still be reached, as delegates from both sides met in Cairo for negotiations.

Additionally, gold futures fell 0.2% to $2,320.70/oz, while EUR/USD traded 0.1% lower at 1.0745.


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