European Stocks Close Higher On Earnings

After struggling for direction earlier in the session, European stocks closed higher on Thursday with investors reacting to the European Central Bank’s monetary policy announcement, and digesting a slew of earnings updates.

The European Central Bank left its key interest rates and its forward guidance on asset purchases unchanged, in line with expectations, amid concerns over high inflation.

The Governing Council, led by ECB President Christine Lagarde, left its key interest rate, the main refinancing rate, unchanged at zero, the deposit rate at -0.5% and the marginal lending rate at 0.25%.

Policymakers expect key interest rates to “remain at their present or lower levels until it sees inflation reaching two per cent well ahead of the end of its projection horizon and durably for the rest of the projection horizon,” the bank reiterated.

Further, the Governing Council assessed that realized progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilizing at two percent target over the medium term.

European Central Bank President Christine Lagarde said that inflation is set to remain higher for longer than expected, but it is temporary and price growth is set to ease over the course of next year.

“While the current phase of higher inflation will last longer than originally expected, we expect inflation to decline in the course of next year,” Lagarde said in the introductory statement to the post-decision ECB press conference.

The pan European Stoxx 600 climbed 0.24%. France’s CAC 40 gained 0.75% and Switzerland’s SMI surged up 0.54%, while the U.K.’s FTSE 100 and Germany’s DAX edged down marginally.

Among other markets in Europe, Belgium, Denmark, Greece, Iceland, Ireland, Portugal, Spain and Turkey closed higher.

Austria, Czech Republic, Finland, Netherlands, Norway, Russia and Sweden ended weak, while Poland settled flat.

In the UK market, WPP climbed more than 8% after raising its 2021 guidance. Darktrace Plc shares surged up 6.7%. GlaxoSmithKline, Smurfit Kappa Group, Ashtead Group, Fresnillo, Smith (DS), Antofagasta and Reckitt Benckiser gained 2 to 4%.

3I Group, Bunzl, Burberry Group, Coca-Cola, Polymetal International, Aveva Group, IAG and Severn Trent also ended notably higher.

Royal Dutch Shell drifted down 3.5% after it missed quarterly profit estimates. Vodafone Group, DCC, Sainsbury (J), Kingfisher, London Stock Exchange, BT Group, Smiths Group, Imperial Brands, BP, Rolls-Royce Holdings, HSBC Holdings, Rio Tinto and Barratt Developments lost 1 to 3%.

In the French market, STMicroElectronics soared nearly 6.5%. CapGemini gained 6% after raising its 2021 targets.

Dassault Systemes gained nearly 6%. Valeo, Atos, Hermes International, Veolia, Safran, Sodexo, LVMH, Saint Gobain and Faurecia gained 1 to 3%.

Airbus gained more than 1% after raising its full-year financial targets.

Unibail Rodamco tumbled more than 8%. WorldLine shed about 5%. Renault and Technip also closed notably lower.

In Germany, Sartorius, Infineon Technologies, Adidas, Merck, SAP and E.ON gained 1 to 2.5%. German automation company KUKA advanced nearly 4% as it reported a 26.8% growth in 9-month sales revenues, primarily driven by the boom in e-vehicles in North America and conquering new markets such as e-commerce and consumer goods.

Deutsche Wohnen plunged more than 8%. Volkswagen shed more than 4% after lowering its forecast for deliveries to customers after reporting a decrease in operating profits for the third quarter due to the global chip crunch.

HelloFresh and Porsch Automobil declined 4% and 2.7%, respectively. BASF, Fresenius and BMW also declined sharply

Shares of Arcadis NV plunged 10% in Amsterdam after the Dutch design, engineering and consultancy company reported weak earnings in its third quarter, despite higher revenues.

Anheuser-Busch InBev, the world’s largest brewer, soared more than 10% after lifting its full-year forecast.

Data released by the Federal Labor Agency showed Germany’s unemployment declined sharply in October, with the number of people out of work decreasing by 39,000 in the month after falling 31,000 in September. This was bigger than the economists’ forecast of -20,000.

The jobless rate fell to 5.4% in October, in line with expectations, from 5.5% in September.

Eurozone economic confidence advanced unexpectedly in October, monthly data released by the European Commission showed. The economic confidence index rose to a three-month high of 118.6 in October from 117.8 in the previous month. The reading was forecast to 116.9.

The industrial sentiment index advanced unexpectedly to 14.2 from 14.1 a month ago. The score was forecast to fall to 12.5. The services confidence index came in at 18.2, up from 15.2 in the previous month and the expected score of 16.5.

Germany’s consumer price inflation advanced to 4.5% in October from 4.1% in September, preliminary data from Destatis showed. The rate was also above economists’ forecast of 4.4%. A similar higher price growth was last seen in October 1993.