By Peter Nurse
Investing.com - European stock markets drifted lower Tuesday as investors digested more corporate earnings following disappointing manufacturing activity from the Eurozone’s two largest economies.
At 04:20 ET (09:20 GMT), the DAX index in Germany traded 0.9% lower, the CAC 40 in France dropped 0.9% and the FTSE 100 in the U.K. fell 0.5%.
Data released earlier Tuesday showed that French economic activity grew in February for the first time since October, with a flash reading for the purchasing managers' index for its dominant services sector rising to 52.8 points in February, up from 49.4 in January.
However, the flash February PMI for France's manufacturing sector fell to 47.9 points from 50.5 in January, below the 50 points which shows an expansion in activity.
There was a similar story in Germany, the Eurozone’s largest economy.
Although Germany’s composite PMI climbed to 51.1 in February, from 49.9 the previous month, its vital manufacturing sector PMI fell to 46.5, suggesting it was contracting, dragging the Eurozone’s manufacturing sector down to 48.5 as a whole.
These disappointing numbers come after the Eurozone economy unexpectedly grew in the final quarter of 2022, and suggest the European Central Bank’s monetary tightening is having an impact.
There also remains a degree of caution within the markets as Russian President Vladimir Putin makes a speech as his invasion of Ukraine enters a second year.
U.S. President Joe Biden attempted to preempt this address on Monday with a surprise visit to Ukraine, where he offered his support for as long as it takes.
In the corporate sector, HSBC (LON:HSBA) stock fell 1.9% despite Europe’s largest bank reporting a sharp jump in its fourth-quarter profit earlier Tuesday. The lender also signaled the windfall from rising interest rates had peaked, while it had taken a $300 million loss on the expected sale of its Russian business.
BHP (LON:BHPB) stock fell 2.4% after the Anglo-Australian miner recorded a sharp decline in its half-year profit on slowing demand in China and weakening iron ore prices.
InterContinental Hotels (LON:IHG) stock fell 1.6% even after the group announced it will buy back another $750M of stock after the post-pandemic recovery in travel allowed it to post solid results.
Engie (EPA:ENGIE) stock rose 3.9% to its highest in two months after the French energy giant announced profits ahead of expectations for the fourth quarter of 2022 and raised its dividend.
Oil prices fell Tuesday, weighed by strength in the U.S. dollar as traders prepare for more economic clues this week towards the path of U.S. monetary policy.
Strong economic data this month has raised expectations that the Federal Reserve will have to hike more than previously expected. This has buoyed the dollar, which makes crude, which is denominated in dollars, more expensive for foreign buyers.
Attention this week will be on the minutes of the Federal Reserve’s February meeting, due on Wednesday, as well as a number of Fed speakers.
By 04:20 ET, U.S. crude futures traded 0.5% lower at $76.19 a barrel, while the Brent contract fell 1.7% to $82.68.
Additionally, gold futures fell 0.5% to $1,841.65/oz, while EUR/USD traded 0.2% lower at 1.0665.