Portfolio

Europe close: Stocks slip on soft China data, profit-taking

By Alexander Bueso

Date: Monday 27 Nov 2023

(Sharecast News) - European stocks retreated from a two-month high on Monday, with investors choosing to take profits ahead of key inflation data later in the week.
Also weighing on sentiment was government data in China which revealed that industrial profits continued to decline in November, albeit at its slowest pace in nearly a year. Profits at industrial enterprises in the country decreased by 7.8% from January to October compared to last year.

The pan-European Stoxx 600 was down 0.34% at 458.41, alongside a 0.39% decline for the German Dax to 15,966.37.

The Stoxx 600 finished Friday's session at 459.98, its highest close since 20 September.

"Things are quiet out there, perhaps a little too quiet, and more than a few investors will be casting a nervous eye on the Vix, which has reached its lowest level since January 2020," said IG chief market analyst Chris Beauchamp.

"Nonetheless, barring a sudden handbrake turn from the Fed this month, the backdrop of falling yields and rising stocks could be with us well into December."

Figures on the following Thursday were expected to show the annual rate of US PCE inflation slowing to 3.1% in October from 3.4% in September, with the core rate falling to 3.5% from 3.7% - which would be the slowest rate since April 2021.

Meanwhile, eurozone annual CPI inflation is also forecast to ease to 2.8% from 2.9%, with the core gauge declining to 3.9% from 4.2%.

Energy stocks across Europe were mostly weaker ahead of this week's OPEC meeting, with Brent crude down 0.3% at $80.28 a barrel, continuing its descent after trading above the $90 level just a month ago.

"Declines across both crude and natural gas prices do help allay fears of a potential inflationary surge, instead helping drive expectations of further downside for global CPI levels," said analyst Joshua Mahony from Scope Markets.

"With European and US gas storage levels well above the historical norm, the recent cracks seen in OPEC production agreements have helped drive down prices as markets start to question the strength of demand in the fourth quarter."

Energy heavyweights Shell, Repsol and TotalEnergies were firmly in the red, although BP managed to buck the trend.

London-listed property portal Rightmove jumped 5% after lifting its guidance for average spend per advertiser after stronger-than-expected trading. Numis upgraded its rating for Rightmove from 'add' to 'buy', highlighting an attractive entry point after the stock's recent falls.

In contrast, Goldman Sachs downgraded its stance on gambling company Entain, to 'sell' from 'buy', and slashed the price target to 820p from 1,450p, causing shares to drop.



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