Frankfurt (Reuters) – Disappointing economic data and weak company balance sheets are not preventing investors from returning to the European stock markets.
The Dax and EuroStoxx50 each rose 0.3 percent on Monday to 13,523 and 3719 points, respectively, after ending July with strong price gains.
“The fact that prices seem to have gained a foothold despite unresolved problems such as the looming energy crisis in Germany and the ongoing war in Ukraine is a strong signal and gives hope for a better second half of the year after the first six disastrous months on the stock market,” said investment strategist Jürgen Molnar Brokerage house RoboMarkets. “It seems like everything negative has been priced in and the recovery has already started.”
GERMAN AND CHINESE ECONOMY WEAK
However, the biggest slump in German retail sales since the start of the time series in 1994 dampened the mood. “People in Germany are currently busy projecting their heating costs for autumn. In the end, there is simply less left to fulfill consumer wishes,” said analyst Jochen Stanzl from online broker CMC Markets.
Things are not going well for the important trading partner China either. The Caixin/Markit Purchasing Managers’ Index fell surprisingly sharply. “The hope that the industry will pick up again after the end of drastic lockdown measures – which shut down important economic regions in April – has been dampened by the data,” commented Commerzbank economist Bernd Weidensteiner.
This fueled speculation that top buyer China would see lower demand for crude oil. The Brent variety from the North Sea fell by 0.4 percent to $103.58 per barrel (159 liters). The gas price, on the other hand, picked up again after the relaxation of the past few days. The European future increased by 4.7 percent to EUR 200.50 per megawatt hour.
DUMMY OUTLOOK OF COVESTRO AND VARTA
Among the German companies, Covestro and Varta were in the spotlight. The chemical company and the battery manufacturer lowered their full-year targets and blamed rising energy costs and weakening demand, among other things. Analyst Markus Mayer from Baader Helvea Bank warned that Covestro’s preliminary quarterly results were better than expected. The share recovered after an opening loss of a good five percent and was last listed one percent weaker. With a drop of 13.5 percent at times, Varta’s titles were heading for the biggest daily loss of the year.
HSBC, on the other hand, is more optimistic about the future after surprisingly strong quarterly results. Based on these figures, market expectations for the bank’s pre-tax profit are likely to rise by ten percent, forecast analyst Joseph Dickerson of investment bank Jefferies. HSBC shares rose by up to seven percent in London, the strongest since a year and a half ago.