European Stocks Close Higher As Bond Yields Retreat

European stocks closed higher on Thursday as bond yields dropped after data showed an uptick in U.S. jobless claims in the week ended September 30th.

However, gains were just modest in most of the markets in the region as disappointing data from the region weighed on sentiment.

German exports fell in August, and the construction sector contracted in September. In France, industrial production fell, and in the U.K., the construction industry experienced the biggest slide in activity in more than three years last month.

The pan European Stoxx 600 gained 0.28%. The U.K.’s FTSE 100 climbed 0.53%. France’s CAC 40 edged up 0.02% and Germany’s DAX ended 0.2% down, while Switzeland’s SMI advanced 0.25%.

Among other markets in Europe, Austria, Belgium, Denmark, Netherlands, Norway, Portugal, Spain, Sweden and Turkiye closed higher.

Greece, Iceland and Poland ended weak, while Finland and Russia ended flat.

In the UK market, Royal Mail rallied 7%. Imperial Brands gained 4% after the maker of John Player Special cigarettes reaffirmed its forecast and announced a $1.3 bln share buyback.

EasyJet and Tesco both gained more than 3.5%. IAG, Hiscox, Pennon, Centrica, Barratt Developments, Hikma Pharmaceuticals, British American Tobacco, Persimmon, Auto Trader Group, Compass, Severn Trent, RightMove and United Utilities gained 1.3 to 2.6%.

JD Sports Fashion ended lower by about 3%. Anglo American ended down 1.6%, while Just Eat Takeaway.com, Barclays, Glencore, Smith & Nephew, Natwest Group and Lloyds Banking lost 0.6 to 1%.

In the French market, Alstom plunged 37% after the train manufacturer slashed its free cash flow target due to a ramp-up in production and delays in some orders.

Renault, Edenred, Capgemini, Saint Gobain and ArcelorMittal ended lower by 0.8 to 1.6%.

LVMH, Sanofi, Carrefour, BNP Paribas, Michelin and Engie gained 0.8 to 1.2%.

In the German market, Henkel surged nearly 2%. Zalando gained about 1.35%, while Deutsche Post, Beiersdorf, Deutsche Boerse, Fresenius Medical Care, Sartorius, Deutsche Telekom and E.ON gained 0.7 to 1%.

Puma tanked nearly 12%. Adidas ended 3.7% down, while Covestro, Porsche, Siemens Healthineers, BASF, Infineon, BMW, Volkswagen and Siemens shed 0.9 to 2.2%.

In economic news, Germany’s exports declined more than expected in August highlighting the risk of the economy slipping into a recession in the second half of the year.

Exports decreased 1.2% on a monthly basis in August, slower than the 1.9% drop in July, Destatis reported Thursday. But the fall was bigger than economists’ forecast of 0.4% decrease.

At the same time, imports posted an unexpected fall of 0.4%, after a 1.3% slide in July. Imports were expected to climb 0.5%.

As a result, the trade surplus fell to a seasonally adjusted EUR 16.6 billion from EUR 17.7 billion in July. Nonetheless, it remained above the forecast of EUR 15.0 billion.

Germany’s construction sector contracted more sharply in September amid a near-record fall in new work, survey results from S&P Global showed on Thursday. The construction Purchasing Managers’ Index fell further to 39.3 in September from 41.5 in August.

France’s industrial output declined 0.3% on a monthly basis in August, after rebounding in the previous month, data released by the statistical office INSEE revealed. Output was forecast to fall by 0.4%.

Similarly, manufacturing output decreased 0.4%, reversing July’s 0.4% gain.

The UK construction activity contracted at the fastest pace since May 2020 amid rising borrowing costs and weak demand, survey results from S&P Global showed.

The Chartered Institute of Procurement & Supply construction Purchasing Managers’ Index posted 45.0 in September, down from 50.8 in August. The score fell below the neutral 50.0 mark for the first time since June.

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