European Stocks Close Higher As Investors React To Earnings, Await Rate Decisions

European stocks closed broadly higher on Tuesday, but suffered their biggest monthly loss in about a year. Investors reacted to a slew of earnings updates and economic data, and awaited key central bank meetings for further direction.

The Federal Reserve is scheduled to announce its interest rate decision on Wednesday. The U.S. central bank is widely expected to hold rates, and the focus will be on the accompanying statement for clues about future interest rate path.

The Bank of England is set to announce its monetary policy on Thursday.

The pan European Stoxx 600 climbed 0.59%. Germany’s DAX and France’s CAC 40 gained 0.64% and 0.89%, respectively. The U.K.’s FTSE 100 edged down 0.08%, and Switzerland’s SMI crept up 0.09%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Netherlands, Norway, Poland, Portugal and Sweden ended higher.

Iceland, Russia and Turkiye closed weak, while Spain ended flat.

In the UK market, Rolls-Royce Holdings rallied more than 6%. Just Eat Takeaway.com surged nearly 5%. Royal Mail gained about 3.25%. Segro, Kingfisher, Croda International, Experian, Pennon, Standard Chartered and Associated British Foods gained 2 to 3%.

BP dropped 4.6% after the energy giant reported a steep drop in third-quarter profits as a result of lower prices for hydrocarbons and lower than expected results from its gas trading operations.

Glencore ended lower by about 4% and IHG drifted down 2.7%. Ferguson, Antofagasta, Royal Dutch Shell, Easyjet, Rentokil Initial, Vodafone, TUI and Hikma Pharmaceuticals lost 1 to 2.2%.

In the German market, Sartorius surged nearly 8.5%. BASF gained 4% as it unveiled fresh cuts to investment and measures to reduce operating costs.

Qiagen climbed 6.3%. BASF, Zalando, Vonovia and Merck gained 2.7 to 4%.

Porsche ended more than 1% down. Deutsche Bank, Deutsche Boerse and HeidelbergCement posted moderate losses.

In Paris, Bouygues ended stronger by about 4% after posting solid nine-month results and confirming FY23 outlook.

Stellantis rallied on strong results. Unibail Rodamco, Alstom, WorldLine, ArcelorMittal and Capgemini gained 2.7 to 4%. Renault, Teleperformance, Eurofins Scientific, STMicroElectronics, Sanofi, Schneider Electric, Vinci, Societe Generale and BNP Paribas advanced 1.1 to 2.2%.

On the economic front, France’s consumer price inflation softened to a 20-month low in October on slower growth in energy and food prices, preliminary estimate from the statistical office INSEE showed.

Consumer price inflation slowed to 4% in October, as expected, from 4.9% in September.

EU harmonized inflation also weakened in October, to 4.5% from 5.7% registered in the prior month. The rate matched expectations.

France’s economy expanded modestly in the third quarter as the strength in household spending and investment were mostly offset by falling exports. Gross domestic product grew only 0.1% sequentially in the third quarter, first estimate from the statistical office INSEE showed. The rate came in line with expectations.

Germany’s import price index fell 14.3% year-on-year after a 16.4% slump in August, data from Destatis showed. Economists were looking for a 15.3% decline.

Germany’s retail sales fell 0.8% month-on-month following a 1.2% slump in August, preliminary data from the statistical office Destatis showed Tuesday. Economists had forecast a 0.5% gain.

On a year-on-year basis, retail sales decreased 4.3% in September after a 2.3% fall in the previous month. Economists were looking for a 4% gain.

The unexpected contraction in the euro area economy during the third quarter as well as inflation slowing to a more than two-year low in November reflects the impact of the aggressive monetary policy tightening stance adopted by the European Central Bank so far but the stage is still not set for a rate cut as inflation is forecast to stay “higher for longer”.

Gross domestic product registered a quarterly contraction of 0.1% in the third quarter, in contrast to the 0.2% expansion in the second quarter, Eurostat said in its preliminary flash estimate, released today.