By Peter Nurse
Investing.com - European stock markets traded higher Thursday, stabilizing after the sharp losses earlier this week, helped by stronger than expected U.K. second-quarter growth and a sharp jump in French consumer spending.
At 4:05 AM ET (0805 GMT), the DAX in Germany traded 0.4% higher, the CAC 40 in France rose 0.8% and the U.K.’s FTSE 100 climbed 0.6%.
European equity indices are still recovering from Tuesday’s rout, prompted by higher U.S. bond yields, which saw the DAX and CAC 40 drop over 2% in Europe and the Nasdaq Composite slump 2.8%, its largest selloff since March, on Wall Street.
Helping the tone were the latest revision to U.K. quarterly GDP figures, which showed that the U.K. economy grew 5.5% in the second quarter, a sharp improvement from the 1.6% fall the previous quarter, with government spending, exports and business investment all stronger than previously estimated. However, the data is now three months old. More up-to-date numbers released on Thursday showed house price growth almost came to a standstill in August.
French consumer spending rose 1.0% month-on-month in August, substantially above July’s drop of 2.4%, while the country’s annual inflation rate rose to 2.7% in September, slightly less than expected but still its highest rate in nearly a decade. Germany's jobless numbers, meanwhile, fell by a seasonally-adjusted 30,000 this month, roughly in line with expectations.
In corporate news, Hennes & Mauritz (ST:HMb) stock rose 0.6% after the Swedish retailer reported a bigger-than-expected jump in quarterly pretax profit to above pre-pandemic levels, while Diageo (LON:DGE) stock gained 2.7% with the spirits maker saying its new financial year was off to a "strong start" and forecast a boost to operating margins.
Boohoo (LON:BOOH) stock slumped 9.7% after the online fashion retailer warned that freight inflation and higher wages would hit full-year profit margins. It also revised down its sales growth guidance for the year, suggesting that the reopening of rivals' stores and the hangover from a scandal over low pay in its supply chain have hurt its business.
More broadly, doubts remain about the strength of China’s economic expansion. The country’s factory activity contracted in September for the first time since Covid-19 began in 2020, with its manufacturing purchasing managers index falling to 49.6 in September, from 50.1 in August.
Also of concern was a report from Reuters that some of China Evergrande Group's (HK:3333) offshore bondholders have not received interest payments due by the end of Wednesday New York time, meaning that the highly indebted property giant has missed its second debt obligation this month.
Crude prices edged higher despite official figures showing an unexpected rise in U.S. inventories as production in the Gulf of Mexico returned to near-normal. U.S. crude inventories rose by 4.6 million barrels last week, data from the Energy Information Administration showed, compared with expectations for a 1.7 million-barrel drop.
By 4:05 AM ET, U.S. crude futures traded 0.5% higher at $75.19 a barrel, while Brent rose 0.4% to $78.39.
Additionally, gold futures rose 0.6% to $1,733.15/oz, while EUR/USD traded flat at 1.1595.