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European stocks edge higher; AB Inbev results help ahead of key data

Published 31/10/2023, 08:54
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Investing.com - European stock markets edged higher Tuesday, as investors digested more corporate earnings ahead of the release of key regional growth and inflation data, overshadowing disappointing Chinese activity data.

At 03:45 ET (08:45 GMT), the DAX index in Germany traded 0.5% higher and the CAC 40 in France climbed 0.6% and the FTSE 100 in the U.K. rose 0.2%.

AB Inbev boosted by hefty share buyback

Investors have been digesting more quarterly earnings from a series of influential companies Tuesday.

Anheuser Busch Inbev (EBR:ABI) stock rose 2.5% after the world’s largest brewer reported third-quarter sales growth that was slightly better than expected, and also announced a $1 billion share buyback, as pricing boosted revenue and helped offset lower volumes of beer sold.

Rival Carlsberg (CSE:CARLb), by contrast, fell 2% after the Danish brewer reported third-quarter sales broadly in line with expectations but warned that weak consumer sentiment in Europe and Southeast Asia could impact beer markets negatively.

BP (LON:BP) stock fell 4.6% after the energy giant reported third-quarter earnings of $3.3 billion, missing analysts' forecasts, after a large drop in energy prices from a year ago, overshadowing an extension of its $1.5 billion share repurchase program.

BBVA (BME:BBVA) stock fell 2% after the Spanish lender's 29% year-on-year rise in provisions and a loss in Turkey overshadowed a 13% rise in third quarter net profit.

Thales (EPA:TCFP) stock slumped 4% after Europe's largest defence electronics maker said its order intake fell 18% from the same period last year, even with resurgent demand for jetliner components and military equipment.

Eurozone growth, inflation data due

Investors will have the opportunity to study the latest eurozone growth and inflation data later in the session, as they look for clues of future European Central Bank monetary policy decisions. 

Gross domestic product is expected to grow by just 0.2% on an annual basis in the third quarter, a drop from 0.5% growth the prior quarter, while consumer prices are seen rising 3.1% annually in October, a drop from 4.3% the previous month.

French GDP grew 0.1% on the quarter, with growth slowing from the previous quarter, data showed earlier Tuesday, while German retail sales slumped 0.8% on the month in September, an annual drop of 4.3%.

Chinese activity data disappoints

Sentiment was hit earlier Tuesday by the release by weaker than expected Chinese purchasing managers’ indices, denting hopes a recovery in the world’s second largest economy, however fragile, was underway.

China’s official manufacturing purchasing managers' index fell to 49.5 in October from 50.2, dipping back below the 50-point level demarcating contraction from expansion.

The non-manufacturing PMI also fell to 50.6 last from 51.7 in September, indicating a slowdown in activity in the vast service sector and construction.

Chinese policymakers have unveiled a raft of measures over the last few months in an attempt to boost the economy after a rapid loss of momentum following a brief post-COVID rebound. 

The country’s third-quarter gross domestic product rose 4.9%, data showed earlier this month. This was more than expected, raising tentative hopes of a recovery.

BOJ holds interest rates at low levels

Trading ranges are likely to be limited ahead of Wednesday’s Federal Reserve meeting, given the likely significance of this decision.

Earlier Tuesday, the Bank of Japan held interest rates at ultra-low levels and slightly altered the rhetoric around its yield curve control policy, saying it will use the upper end of its YCC band, a range of -1% to 1%, as a reference cap for its market operations. 

Crude rebounds after sharp fall

Oil prices edged higher Tuesday, rebounding after a bruising session, although weaker-than-expected activity data from China limited the gains on fears of slowing fuel demand from the world's largest crude importer.

By 03:45 ET, the U.S. crude futures traded 0.7% higher at $82.91 a barrel, while the Brent contract climbed 0.9% to $87.11 a barrel. 

The market slumped nearly 3% on Monday despite Israel stepping up its ground assault on Gaza, as traders chose to bank recent profits ahead of a string of key economic events this week, most notably a Fed decision on interest rates this Wednesday.

Events in the Middle East remain in focus, with traders wary of the conflict between Israel and Hamas expanding into a wider regional war in this oil-rich region. 

Additionally, gold futures rose 0.1% to $2,007.05/oz, while EUR/USD traded 0.2% higher at 1.0638.

 

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