World Markets

European Markets Overview: Euro Zone Economic Growth Reported Above Expectations

Overview:

The week from the 30th October to the 3rd November saw the STOXX 600 rise by 0.67%, in its second consecutive week of gains, with 69% of stocks up over the week. In terms of volumes traded, the STOXX 600 was at its 12 month average. Key economic data came out of the euro zone, with growth above expectations. Meanwhile, the UK rose its base rate for the first time in a decade, whilst the Fed left rates unchanged as Janet Yellen was replaced by Jay Powell as Chairperson of the Federal Reserve.

The top performing main indices were the DAX 30 (+2.0%), the Oslo all Share (+1.8%) and the ISEQ 20 (+1.7%).

Bank of England raises rates for the first time in 10 years

The Bank of England rose the base rate in the UK for the first time in the last decade, with the base rate up from 0.25% to 0.5%, a move widely anticipated by financial market participants. The pound had its worst days since days after the European referendum on the day of the statement, losing 1.5% against the SDR, as the governor of the Bank of England highlighted the Brexit-driven uncertainty facing the British economy, whilst not ruling out a decrease in the base rate if the economy suffers. UK equity markets fared strongly over the week, with the FTSE 250 up 1.6% and the FTSE 100 gaining 0.7%.

The euro zone’s positive momentum continues

Positive economic data coming out of Europe continued through the week, as the economy grew by 2.5% YoY, above expectations of 2.4%. Further, unemployment fell to its lowest level in nine years, at 8.9%. The one disappointing piece of economic data was the inflation headline figure of 1.4%, below the 2% target.

Oil & Gas sector top performer over the week

The Oil & Gas was the top performing sector as oil prices extended a bull run to their highest levels since July 2015 on hopes that major producers would maintain their output cuts. Amongst the top gainers were Saipem (+11.9%), Lundin Petroleum (+11.3%), TGS NOPEC Geophysical (+8.3%), Tullow Oil (+7.1%) and Subsea 7 (+6.5%).

UK banks down with “dovish” BoE

British banks were the exception to the strong equity market performance over the week on the FTSE 100 and FTSE 250.Standard Chartered (-4.0%), RBS (-2.5%), Lloyds Bank (-2.2%), HSBC Holding (-1.4%) and Barclays (-0.3%) were all down. These banks suffered from the “dovish hike”, with the rate hikes likely to be more gradual and limited than market participants had been expecting.

Busy week for gambling stocks

This week was news heavy for bookmakers, as the UK government announced a crackdown on FOBTs, with the maximum stake to fall from £100 to between £2 and £50. Despite this news that would hurt the performance of the bookmakers, the key players were up led by Paddy Power Betfair, which added 8.9% after the betting company announced profit in Q3 and raised full-year guidance, despite the absence of a major football tournament. Ladbrokes Coral gained 7.8% amid rumours of a takeover by GVC Holdings, which offloaded its Turkish business which would facilitate the takeover of the recently merged entity from a regulatory perspective. Gambling technology firm Playtech saw its shares plummet 22% after it warned on profit because of a slowdown in parts of Asia and problems with a bingo contract.

Schibsted top performer

Schibsted surged 23.0% to the top of the Euro STOXX 600 after the Norwegian consumer publishing firm’s results came in above forecast.

Coloplast weighs on OMXC20

Coloplast dropped 15.0% after the Danish company cut its outlook and its new strategy disappointed the market. Peer, colostomy bag maker ConvaTec fell 8.9% to hit a record low on Friday.

Altice top faller

Altice was the biggest loser across the STOXX 600 with a 21.5% drop, as investors fretted about the Amsterdam-based Telecoms firm’s ability to recover market share in France.

Week ahead:

  • 07.11.2017: Eurozone September retail sales
  • 08.11.2017: German October trade balance

Top performers

Top stocks by investor turnover

Index performances


Nasdaq Advisory Services European Team Alexander Free
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