In a sign of resilience amid fluctuating global markets, European stocks edged higher on Thursday, powered by a series of upbeat earnings reports and a notable decrease in inflation across several key German states. This positive momentum highlights the dynamic interplay between corporate performance and macroeconomic indicators, shaping investor sentiment across the continent.
The pan-European STOXX 600 index saw a modest increase of 0.1%, with construction and materials sectors leading the gains. Among the standout performers, CRH, a Dublin-based building materials producer, saw its shares climb 7.1% after forecasting a core profit growth of 6% to 10% in 2024, surpassing its profit target for 2023. Similarly, Eiffage, a French construction group, added 4.4% to its value, buoyed by better-than-expected full-year free cash flow and a robust order book.
In Germany, the DAX index climbed 0.4%, touching a record high, following preliminary data indicating a fall in inflation in six economically vital states for February. This development suggests that inflation is on a downward trajectory, a sign of potential easing in monetary policy in the future.
Investors are now keenly awaiting the U.S. personal consumption expenditures (PCE) data, the Federal Reserve's preferred inflation gauge, for further clues on the U.S. interest rate trajectory. With EU-wide inflation data expected to show a slowdown to 2.5% year-on-year in February, from 2.8% in January, the global financial community is on the lookout for signs of easing inflationary pressures.
Despite a few setbacks, such as Beiersdorf's shares dropping 3% following a forecast of slower growth in organic sales for 2024, and Aixtron tumbling 14.5% to the bottom of the STOXX 600 despite anticipating revenue growth, the European stock market appears poised for its fourth consecutive month of gains. This optimistic outlook is underpinned by stronger-than-expected earnings reports and a surge in technology stocks, inspired by Nvidia's blowout forecast.
| Company/Index | Movement | Reason |
|---|---|---|
| CRH (NYSE:CRH) | +7.1% | Forecast beat and profit growth outlook |
| Eiffage | +4.4% | Strong cash flow and order book |
| German DAX | +0.4% | Drop in inflation data |
| Beiersdorf | -3% | Slower organic sales growth forecast |
| Aixtron | -14.5% | Despite positive revenue growth forecast |
As the European market navigates through earnings season and macroeconomic developments, investors remain watchful, balancing optimism with a cautious eye on inflation and monetary policies.
