Disturbing news from Asia contributes to the decline in European stock markets

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On Tuesday, key Western European stock market indicators showed a decline due to increased risk aversion among market participants. Investors are concerned about ever-rising geopolitical tensions between the US and China and discuss the prospects of a severe economic slowdown.

So at the time of writing this material, the Consolidated Major European Index in STOXX Europe 600 is down 0.67% – to 434.52 points.

Meanwhile, the British FTSE 100 lost 0.16%, the French CAC 40 fell 0.63% and the German DAX fell 0.18%.

Leaders of Growth and Decline

The securities of Italian insurance company Assicurazioni Generali SpA fell by 1.4%. On the eve, the company’s executives announced a EUR 138 million deduction in January-June this year due to write-downs on investments in Russia.

British oil company Genel Energy PLC fell 6.3% despite rising profits and net income in the first half of the year on the back of high oil prices.

The market capitalization of another British oil and gas company, British Petroleum Plc, rose 4.5%. In the second quarter, the company reported record financial results for the past 14 years (profits tripled to $9.26 billion and revenue doubled to $69.51 billion), allowing it to increase its dividend payout by 10%.
The share price of the Austrian banking group Raiffeisen Bank International AG rose by 6.3%. Last January and June, the company significantly increased its net profit, mainly as a result of the sale of the Bulgarian business.

The value of the securities of the European company Wizz Air Holdings PLC increased by 0.04%. In July this year, the company increased the number of passengers carried compared to the same month in 2021 – from 3 million to 4.8 million.

The share price of the Danish transport and logistics company AP Moeller-Maersk AS rose by 1.5%. Earlier, the shipping giant raised its annual forecast for the end of 2022 due to the continued rise in freight rates.
The market capitalization of British bakery chain Greggs PLC increased by 2.2%. The day before, the company’s executives announced that sales were up 27% per year for the first half of the year, leaving Greggs unchanged in its 2022 earnings forecast.

Market moods

European investors continued to monitor financial reports from the region’s majors on Tuesday to gauge corporate health at a time of record inflation.

In addition, market participants are analyzing the prospects of escalating geopolitical tensions between the two world economic powers – the PRC and the US, which could be triggered by a possible visit to Taiwan by US Congress House Speaker Nancy Pelosi.

Pelosi is now in Malaysia, where he will meet Prime Minister Ismail Sabri Jaakob and Parliament Speaker Azhar bin Azizan Harun.

Taiwanese media report that an American politician will travel to Taipei on Tuesday evening after a visit to Malaysia.
China’s Defense Ministry has previously warned that Nancy Pelosi’s trip must be canceled or the Chinese military will “resolutely defend China’s national sovereignty”. Still, many experts believe that Pelosi will almost certainly visit the area Beijing claims.

Previous trading results

Last Monday, European stock indices fell amid the spectacular drop in oil prices.
As a result, the consolidated index of major European companies STOXX Europe 600 fell by 0.19% – to 437.46 points.

The best performers on Monday’s STOXX 600 index were those of British management company Quilter Plc (+14.6%) and British educational publishing and evaluation company Pearson (+12.7%).
Shares of the British supplier of measuring equipment Spectris Plc and the Norwegian renewable energy company NEL ASA fell.

Meanwhile, the UK’s FTSE 100 fell 0.13%, the French CAC 40 lost 0.18% and the German DAX fell 0.03%.
The market capitalization of UK bank HSBC Holdings Plc rose 6.1% following the release of its report for the second quarter of fiscal 2022. The region’s largest bank increased its net profit by 62% and pledged to update its quarterly results. to resume. dividend payment in 2023.

The share of Austrian banking group Erste Group Bank AG fell by 1.4%, despite a sharp increase in net profit in the first half of the year due to interest rate hikes.

The value of the securities of the Dutch beer company Heineken decreased by 0.4%, despite the fact that in the first half of the year net profit increased by 22% and turnover by 37%.

The value of the securities of the German developer SAP SE rose by 1.1%. The day before, the company announced that it was starting to buy back shares worth 500 million euros.

The main target of European stock market participants on Monday was news of a 4-5% drop in the oil price, which had an immediate impact on the European energy sector. As a result, the market capitalization of the energy companies British Petroleum, Shell and TotalEnergies fell by 1.9%, 1.7% and 1.6% respectively.

In addition, investors analyzed key macroeconomic data in the eurozone the day before. At the end of July, the economic activity index (PMI) in industrial production in 19 European countries stood at 49.8 points. Analysts had expected the index to rise to 49.6 points. At the same time, the euro area unemployment rate remained at the May level of 6.6% (the lowest recorded value) in June.

Meanwhile, the German manufacturing PMI value turned out to be higher than the initial scenarios – 49.3 points against the expected 49.2 points.

Retail sales in Germany were down 8.8% year-on-year and 1.6% year-on-year in June. Taking this into account, the annual decline has been the maximum since the publication of the country’s retail sales data in 1994. By the way, the market expected the index to rise by 0.2% on average.

According to data from Italy’s statistical office IStat, the unemployment rate in the country fell from 8.2% in May to 8.1% in June. The end result coincided with analysts’ forecasts.

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