EUROPEAN STOCKS SHED LITTLE ON FRIDAY, YET RECORDED LONGEST MONTHLY WINNING RUN SINCE 2013

The pan-European STOXX 600 index fell 0.5% from record high on Friday. Still, European stocks recorded a sixth consecutive month of gains, its longest monthly winning run since 2013. Overall, half of European STOXX 600 companies that have reported so far, 67% have topped analysts’ profit estimates, according to Refinitiv IBES data. While that is below the 72% beat-rate in the first quarter, it still tops the 51% rate in a typical quarter.

UK

The FTSE 100 index ended on a negative note on Friday as shares turned negative after two straight days of gains, as investors grew concerned about Beijing's regulatory crackdown and the spread of the Delta variant. On the corporate front, British Airways owner IAG dropped after it declined to give a profit forecast for the year due to the COVID-19 pandemic, but said its summer capacity would rise to 45% from 22% in the previous quarter. Glencore also fell after reporting lower production for nickel, lead and coal in the first half. On the other hand, global education group Pearson beat expectations. The FTSE 100 ended July virtually flat, snapping a winning streak of five consecutive months, as losses in banks, oil stocks and personal goods shares offset gains in insurance, real estate and homebuilder stocks.

GERMANY

DAX index closed 15544 level, slight negative on Friday with 0.61% downside. Germany's inflation rate jumped in July to the highest level since 1993. On the corporate front, investors welcomed upbeat earnings reports from UniCredit, Essilor Luxottica and Air France-KLM. On the other hand, German healthcare group Fresenius sharply declined after it raised its 2021 earnings guidance but sounded cautious on new virus variants and stalling vaccination progress.

FRANCE

The CAC 40 shed 21 points or 0.3% to 6,613 on Friday, as investors gauged a large batch of economic and earnings data. In France, preliminary Q2 GDP figures came out stronger than expected showing 0.9% quarterly growth, although household consumption advanced 0.3% over a month in June, much slower than forecasts of a 1.4% rise. On the earnings front, Renault sank 3.4% despite revealing 1st semester net profits of €354 million, compared to the €7,300 million loss in 1H 2020. Additionally, Air-France KLM slipped 4.6%, even though the air carrier said it outperformed its regional competitors in seat capacity and Q2 revenues rebounded by 133% to €2.75 billion. Thus, the index capped monthly and weekly gains at 1% and 0.8%, respectively, still better than its European peers.

ITALY

The FTSE MIB closed 153 points or 0.6% lower at 25,363 on Friday, in line with its European peers, as investors paused to digest a large batch of economic and earnings data, as well as monitor the pandemic situation. The Italian economy expanded by 2.7% over a quarter in the three months ending June 2021, easily beating market expectations of a 1.3% rise, a preliminary estimate showed. Also, the jobless rate in Italy fell to a 7-month low of 9.7% in June, against forecasts of 10.4%. On the corporate side, Unicredit finished 2nd with a 2.8% rise after beating forecasts with €1.1 billion in Q2 profits and announcing plans to take over the commercial activities of Italy’s oldest bank Banca MPS. Meanwhile, oil stocks ENI and Saipem revealed diverging results, with the former posting €1.20 billion in 1H 2021 profits and the latter revealing a €0.78 billion net loss in the same period. The index saw a 0.4% monthly gain and rose a faster 1.1% for the week.

SPAIN

The IBEX 35 traded close to the 8,700 mark at the end of July, after a strong earnings season erased most of the losses suffered earlier in the month although still underperforming its European peers. Among the largest Spanish companies reporting, Iberdrola revealed double-digit growth in revenues and operating profits for the 1H 2021 period, while adjusted net profits rose 8.4% to €1.8 billion, amid soaring profits from its renewables business. Also, multinational steelmaker ArcelorMittal saw its best quarter since 2008, bolstered by surging steel prices and a strong rebound in demand from the construction and manufacturing industries. The largest steelmaker outside of China also announced a $2.2 billion share buyback and upgraded the steel consumption outlook.