European shares edge higher as strong earnings offset French unrest worries
Stocks in Europe slip around 1% after weekend riots in the eurozone’s second largest economy
European shares rebounded on Wednesday (Oct 21), buoyed by a string of strong corporate earnings, despite lingering concerns over violent unrest in France, the continent's second-largest economy. Stocks rose around 1% on the day, after falling around 1% over the weekend following weekend riots. The French government pledged to deploy significant forces to curb the violence.
Investors showed particular appetite for luxury stocks, with EssilorLuxottica, a leading eyewear group, delivering impressive results. The French benchmark rose 0.4%, leading the Stoxx 600 index, which ended the day up 0.24% at 640.20 points. Ben Gutteridge, head of market insights at Invesco, noted that while strong earnings provided a lift, political instability would likely continue to exert a dampening effect on the market's short-term performance.
The automobiles sector suffered the biggest decline, falling 1.2%. The Stoxx 600 index has climbed over 8% so far this year, but is still below its August peak due to inflation worries and political uncertainty. The French unrest has exacerbated these concerns about the country's faltering finances and slowed growth. Carrefour, a leading supermarket chain, saw its shares tumble 13.3%, after cutting its annual earnings forecast amid rising costs and disrupted trading due to the unrest.
Michelin, a tire maker, dropped 5.4% following a decline in nine-month sales. Randstad, a recruitment firm, rebounded 19% after reporting an organic revenue growth of 3.9% for Q3, surpassing analysts' expectations. DSV, a transport and logistics firm, gained 7.9% after reporting increased third-quarter revenue. Investors are also looking forward to earnings from SAP, due after European markets close, as well as Nokia and Barclays on Thursday, which could influence the stocks' trajectory.
Inflation data from the UK, released in September, exceeded expectations, heightening expectations of an interest rate hike by the Bank of England in November. The UK's FTSE 100 index, meanwhile, remained flat. Meanwhile, the European Central Bank is expected to maintain its current rates at its upcoming meeting, with a rate increase anticipated in December, according to LSEG data.
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