Europe midday: Shares pare losses on EZ PMI data, Zur Rose Swiss unit deal
By Frank Prenesti
Date: Friday 03 Feb 2023
(Sharecast News) - European shares pared losses on Friday as the eurozone economy grew in January for the first time since June 2022 after sentiment had been dented at the open by softer earnings from US tech giants, while a surge in Zur Rose stock also provided a lift.
The pan-regional Stoxx 600 index was down 0.11% at 1147 GMT with all major regional bourses lower. Britain's FTSE 100 outperformed with a gain of 0.22%.
Asia shares were mixed as the slump in various Adani group entities continued amid allegations from US short seller Hindenburg of financial wrongdoing.
US tech firms Alphabet, Amazon, and Apple all posted disappointing results after the close of trade on Wall Street.
"Stocks in Europe fell in early trading as the clutch of soft earnings update from the US pricked some of yesterday's giddy optimism that (interest) rates are close to peaking," said Neil Wilson at Markets.com.
"That jolt higher for tech was led by hopes the Fed was near its peak and by a huge rally for Meta shares. It's a push-me pull-me on earnings and peak rate bets."
In economic news, the eurozone economy grew in January for the first time since June 2022, according to a survey released on Friday.
The S&P Global eurozone composite purchasing managers' index rose to 50.3 from 49.3 in December. This was a touch ahead of the flash estimate of 50.2.
A reading above 50.0 indicates expansion, while a reading below signals contraction. The composite PMI for France was revised up a touch to 49.1 from the initial estimate of 49.0, while the PMI for Germany was revised to 49.9 from 49.7.
In the only major equity news of note, shares in Zur Rose surged 70% at one point as the Swiss online drug retailer said it had agreed to sell its Swiss business to Migros subsidiary Medbase in order to focus on its business-to-consumer operation in Germany.
The proceeds of the transactions are estimated at 360m Swiss francs, with the deal set to be completed in the second quarter of 2023.
Sanofi shares fell as the drug maker forecast moderate earnings growth this year, saying higher demand for bestselling asthma and eczema treatment Dupixent would be partly offset by competition for its multiple sclerosis pill Aubagio and product launch costs.
Deutsche Bank adjusted its ratings on a number of retailers on Friday, as it noted that the European general retail sector ended 2022 on a "surprisingly good" note.
"Whilst 2023 is unlikely to be a great year for consumers, the outlook is getting noticeably less chilly in our view," it said.
The bank upgraded discounter B&M European Value Retail and Marks & Spencer to 'buy' from 'hold'. The price targets were lifted to 580p from 460p and to 210p from 145p, respectively.
Deutsche downgraded B&Q owner Kingfisher, Pets at Home, Asos and Wickes to 'hold' from 'buy'. It cut the Kingfisher price target to 260p from 275p, but lifted its price target on Pets at Home to 355p from 310p. The target price for Asos was upped to 950p from 800p, while the Wickes TP was increased to 160p from 150p.
IWG shares fell almost 7% after Barclays cut the stock to 'equal weight' from 'overweight', and the target price to 170p from 190p.
Scandal-hit Orpea continued to be out of favour, down 18%, a day after agreeing a restructuring deal with bondholders.
Centrica shares were lower as the scandal at its British Gas unit over debt collection agents breaking into customers homes sparked calls for compensation to victims.
Reporting by Frank Prenesti and Michele Maatouk for Sharecast.com
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