Europe close: Stocks edge higher, buoyed by stronger economic data
By Alexander Bueso
Date: Wednesday 06 Nov 2019
(Sharecast News) - European stocks were marginally higher on Wednesday as key Eurozone economic releases printed ahead of forecasts, although some economists said that they also pointed to a tricky fourth quarter, while shares of ISS plunged as the company reined in analysts' expectations for its margins.
By the end of trading, the Stoxx 600 was 0.21% higher at 405.07, as Germany's Dax rose by 0.24% to 13,179.89 and the French CAC 40 climbed by 0.34% to 5,866.74. Meanwhile, London's FTSE 100 edged up 0.12% to 7,396.65.
The IHS Markit Eurozone Composite Purchasing Manager's Index (PMI) came in at 50.6 for October, beating expectations that it would remain unchanged from the prior month at 50.2.
Chris Williamson, chief business economist at IHS Markit, said that, though the October PMI was consistent with quarterly GDP rising at a quarter-on-quarter pace of 0.1%, the forward looking data pointed to a possible decline in economic output in the fourth quarter.
"Worryingly, what little growth was seen in October was supported by firms eating into previously placed work, meaning demand needs to revive to boost new business inflows and prevent more firms coming under further pressure to cut activity and jobs," said Williamson.
On the corporate side of things meanwhile, Danish facility services provider ISS plummeted after it cut expectations for its annual operating margins due to the impact of delayed improvements in France and loss-making contracts in Hong Kong and Denmark.
Chief executive Jeff Gravenhorst said: "Our execution has proven unsatisfactory in a few areas leading to an operational shortfall, hereby triggering some negative one-off items impacting 2019.
"Our strategic choices are right, but our level of ambition and our desired pace of change, in hindsight, have proven too ambitious. We have overstretched ourselves. This will change."
Meanwhile, developments in Sino-US relations remained in focus amid increased optimism for a phase one trade deal.
Oanda analyst Craig Erlam said: "We are still seeing plenty of trade war headlines with China, it seems, looking to capitalize on Trump's desire to secure a phase one agreement by demanding the removal of more tariffs.
"I'm not convinced the White House will abide by the latest demands in return for tariff removals alone. The question is whether these late requests could derail the deal so late in the day."
French media conglomerate Lagardère dropped after the Confederation of African Football terminated a major contract with the Lagardère Sports business.
Chocolatier and Nestle supplier Barry Callebaut was lower after it reported a third quarter slowdown but reiterated full year guidance and sales volume growth targets of 4-6% over the next three years.
Societe Generale climbed even after the French bank announced a 20% decline led to a drop in overall turnover, as well as leaving net income short of expectations.
German chemicals distributor Brenntag was among the top risers, with its stock climbing after the company said its diverse product range had helped it to achieve stable third quarter results despite increasingly challenging market conditions.
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