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European Shares Pare Gains After Weak Data

stockmarkets aug17 31jul20 lt

European shares pared early gains on Friday as downbeat Eurozone GDP data offset earlier optimism over encouraging earnings updates from U.S. technology giants Amazon, Apple, Alphabet and Facebook.

The euro area economy contracted at the fastest pace on record in the second quarter amid the coronavirus pandemic, preliminary flash estimate published by Eurostat showed.

Gross domestic product fell 12.1 percent on a quarterly basis, bigger than the 3.6 percent drop in the first quarter. This was bigger than the economists' forecast of 11.2 percent and was the sharpest decline seen since the series began in 1995.

Year-on-year, GDP was down 15 percent in the second quarter versus a 3.1 percent decline a quarter ago.

Meanwhile, flash estimate from Eurostat showed that headline inflation rose unexpectedly to 0.4 percent in July from 0.3 percent in June. Economists had forecast the rate to ease to 0.2 percent.

The pan European Stoxx 600 was up half a percent at 361.39 after losing 2.2 percent the previous day. The German DAX gained 0.6 percent and France's CAC 40 index edged up 0.2 percent while the U.K.'s FTSE 100 was marginally lower, reversing early gains.

Fears of a second wave of the coronavirus were rising in the U.K. after the government imposed fresh lockdown restrictions in northern swaths of the country late Thursday.

Tech stocks gained ground across the board. ASM International NV surged 4.6 percent, Dialog Semiconductor rose over 3 percent and Infineon Technologies added 2.6 percent.

Nokia Oyj jumped shares 13 percent. The Finnish telecoms group upgraded its forecast for 2020 underlying earnings after reporting a 22 percent rise in profits in the second quarter.

Reinsurance company Swiss Re rallied 2 percent. The company swung to a loss in the first half of the year due to coronavirus-related claims and reserves, but said it is confident about the rest of 2020.

French electric utility Engie surged 4.4 percent. The company announced a new review of its assets after reporting a drop in first-half sales and profits.

Lender BNP Paribas advanced 2.6 percent after it beat second quarter profit expectations.

Air France-KLM fell about 1 percent after the airline announced it would cut 1,500 additional jobs.

Automakers BMW, Daimler and Volkswagen were down over 1 percent each as the euro reached its highest level in more than two years.

BT Group shares tumbled 3.1 percent. The telecoms group has warned of a sharp drop in revenue and earnings for the year.

LSE advanced 1.6 percent. The London exchange operator said it has commenced exploratory discussions which may result in a sale of LSEG's interest in MTS or potentially the Borsa Italiana group as a whole.

International Consolidated Airlines Group shares slumped 7.2 percent after the owner of British Airways swung to a loss of €4.21 billion and announced plans to raise €2.75 billion in a capital.

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