EUROPE TRADED FLAT
European stocks traded below the flatline on Wednesday as investors turned more cautious after another batch of Q3 corporate earnings and as inflation woes mount. Reporting before the bell, Deutsche Bank shares fell as Q3 results showed a drop in investment banking revenues despite posting its fifth straight quarterly profit, beating market expectations with a net income of €194 million. Also, Heineken shed more than 2% as beer volumes fell 5.1% organically during Q3, significantly impacted by the pandemic outbreaks in Asia. On the data front, the GfK German consumer sentiment unexpectedly rose to a 19-month high of 0.9 in November, following an upwardly revised 0.4 in October.
The FTSE 100 stayed close to the flatline on Wednesday afternoon, after rallying for three consecutive sessions to its highest level since February 2020, as investors paused for breath to monitor Chancellor Sunak’s Autumn budget speech and assess the risk posed by the pandemic in the UK. Speaking at the House of Commons, Rishi Sunak said the economy is expected to grow 6.5% this year, faster than the 4% forecasted in the Spring budget, and reach pre-pandemic levels at the turn of the year, ahead of the previous deadline of March 2022. On the pandemic front, the UK saw the highest daily death toll of COVID-19 cases since early March, with the number of patients hospitalized also at an 8-month high, raising concerns that restrictions might make a comeback for the first time since “Liberation Day”. On the earnings front, GlaxoSmithKline shares rose 2.8% after posting Q3 EPS of 36.6 pence per share, beating market expectations, and raising its annual profit outlook.
The CAC 40 Index was 0.2% lower on Wednesday to trade around 6,755, as traders balanced inflationary pressure fears with a strong wave of corporate results. Energy shares fell 0.3%, while industrials traded just below the flatline. Individually, Schneider Electric rose 2.1% following the announcement of a strong Q3 and a turnover increase. Further, S.E.B rose 12% following higher forecasts for sales growth this year, Sodexo edged up 6.2% after its corporate results beat market expectations, and Bic advanced 5.8% after posting higher sales across three of its divisions. On the other hand, Worldline fell 6.8%, since the 8.3% organic revenue growth posted was below market expectations.
The FTSE MIB was down to the 26,900 level on Wednesday, partially offsetting the 1.5% gain from the last two sessions but holding around levels not seen in 13 years. Investors traded cautions amid mixed earnings reports, lower commodity prices, and overall inflation concerns. Deutsche Bank shares fell after reports showed a drop in revenues while posting a better-than-expected quarterly profit. Also, investors await the ECB monetary policy decision tomorrow. The central bank is expected to maintain a dovish guidance but traders will be looking for an update on tapering and forward guidance on the economy and inflation. Among single stocks, CNH Industrial (-1.1%), BPER Banca (-1.0%), and Saipem (-1.0%) lead the falls.
The ES35 increased 889 points or 11.01% since the beginning of 2021, according to trading on a contract for difference (CFD) that tracks this benchmark index from Spain.
