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On Tuesday, major European stock indices increased amid the publication of strong statistics on Germany. Moreover, investors are closely monitoring the publication of corporate earnings reports for the third quarter of 2022 from European key companies.
The STOXX Europe 600 index of Europe's leading companies had grown by 0.23% to 399.4 points by the time of writing. The increase in the key indicator has been registered for the fourth consecutive session.
Meanwhile, the French CAC 40 gained 0.43%, the German DAX added 0.96%, and the British FTSE 100 rose by 0.59%.
Top gainers and losers
On Tuesday, the stocks of European automakers' securities rose dramatically on data from the European Automobile Manufacturers' Association (ACEA). According to the latest information from the ACEA, car sales in the EU soared by 9.6% last month compared to September 2021. At the same time, index growth was registered in EU countries regarding the outcome of the second month after permanent decline during thirteen months.
Consequently, at the time of writing, Volkswagen stocks gained 2.1%, Mercedes-Benz advanced by 3.2%, Stellantis added 2.3%, BMW was up 1.5%, and Renault increased by 2%.
Quotes of French advertising holding Publicis Groupe SA rose by 3.3% due to an improved forecast of organic growth in revenue to 8.5% for 2022. At the same time, earlier the company's management expected that revenue would increase by only 6-7% due to the reduction of customer spending.
The market capitalization of Swiss drugmaker Roche Holding fell by 1.4%. The day before, the pharmaceutical company reported an 8% drop in quarterly sales amid a downturn in the treatment of COVID-19. Despite this fact, Roche Holding confirmed its annual forecast.
The stocks of Swiss reinsurance company Swiss Re rose by 1.8%. At the same time, the company's management said it expected insurance claims of $1.3 billion to cover devastation related to Hurricane Ian, which could potentially trigger a net loss of $500 million in the third quarter.
The stocks of Swiss bank Credit Suisse increased by 1.65%. Earlier, the international news agency Reuters reported that the company had asked at least one sovereign fund in the Middle East for an infusion of capital. If Credit Suisse's plans come to fruition, a positive transformation of the struggling financial group is quite possible.
Quotes of Australian-British mining and metals group Rio Tinto fell by 1.2%. The company lowered its annual forecast for refined copper production and said that iron ore shipments would be closer to the lower limit of its forecast in 2022.
Market sentiment
On Tuesday, European stock market participants focused on EU statistics. The Investor Confidence Index in the German economy for the next six months increased to -59.2 points in October from -61.9 points in September. Meanwhile, economists expected the decline of the index to -65.7 points.
The day before, during his speech in the House of Commons UK Minister of Finance Jeremy Hunt announced that he would reverse almost all the tax measures offered by his predecessor Kwasi Kwarteng at the end of September.
Therefore, the British government will increase the corporate tax rate from 19% to 25% from April 2023 and will abandon its plans to cut the dividend tax, implement pay reform and introduce a zero VAT rate for foreign buyers.
Jeremy Hunt's new fiscal plan will likely save £32 billion. In addition, the proposal voiced by the finance minister may push the Bank of England to refuse to raise the interest rate at its November meeting by as much as previously expected. On Tuesday, analysts from US financial conglomerate Morgan Stanley predicted a rate hike of 75 basis points against a previous estimate of 100 basis points.
Earlier, the news broke that the Conservative Party of the UK Parliament called on British Prime Minister Liz Truss to resign after some controversial economic decisions.
Previous trading results
On Monday, European stock indexes closed in the green zone for the third consecutive session.
Consequently, the composite indicator of Europe's leading companies STOXX Europe 600 gained 1.83% and rose to 398.48 points.
The French CAC 40 added 1.83%, the German DAX increased by 1.7%, and the British FTSE 100 advanced by 0.9%.
The stocks of British online fashion retailer ASOS plummeted by over 11%. Earlier, the company confirmed the information about the start of negotiations with its creditors to change the terms of the credit line for $394 million.
The stocks of Swiss bank Credit Suisse increased by 2.6%. On Monday, the news broke that the lender had agreed to pay $495 million to settle claims by the US state of New Jersey related to the bank's mortgage stock transactions.
The market capitalization of German biopharmaceutical company MorphoSys AG soared by 8.6%.
The stocks of British financial services provider Hargreaves Lansdown PLC sank by 6%.
The stocks of Finnish telecommunications equipment maker Nokia Corp. rose by 2.1% on news that communications service provider Reliance Jio India had chosen it as one of the largest suppliers of 5G network equipment.
On Monday, European investors analyzed the prospects of the US Federal Reserve's tightening of its monetary policy.
According to the US Labor Department data published on Thursday, annual inflation in the country slowed down to 8.2% in September from 8.3% in August. Earlier, experts had forecasted a slowdown to 8.1%.
At the same time, consumer price growth excluding food and energy prices accelerated to 6.6% in annual terms from 6.3% in August, hitting an all-time high since 1982.
Despite the slowdown in US inflation, investors continue to be concerned about the prospect of further Fed's monetary policy tightening in its upcoming meetings. Economists are predicting a hike in interest rates by 0.75% in both November and December.
Notably, at the end of the two-day meeting in September, the regulator raised the range of the key rate by 75 basis points to 3.00-3.25%, the highest level since 2008. The decision was made unanimously by all 12 voting members of the Federal Open Market Committee.
Moreover, earlier, the experts of American business-focused newspaper The Wall Street Journal published a fresh regular poll. According to it, the estimation of a possible recession in the US economy grew sharply amid high inflation and permanent increase of interest rates by the US Federal Reserve.
The respondents of The Wall Street Journal believe that the possibility of recession in the United States is 63% in 2023. In addition, the psychological mark of 50% was exceeded for the first time since July 2020.
On Monday, weak performance of US stock exchanges in Friday's trading also exerted significant pressure on the European stock market. Thus, the Dow Jones Industrial Average index fell by 1.34%, the S&P 500 index dropped by 2.37%, and the NASDAQ Composite index was down 3.08%.
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