European stock markets ended slightly higher on Tuesday as investors reacted to a largely disappointing batch of corporate earnings.
The pan-European Stoxx 600 ended 0.12 percent higher with many sectors in negative territory. However, the FTSE 100 closed at another record high on Tuesday, passing the 7,500 for the first time ever. The German DAX pared gains after hitting a new all-time high on Tuesday. The index closed around the flat line.
Bank stocks were down as several lenders dipped towards the bottom of the benchmark. Singapore sovereign wealth fund GIC, which had invested in UBS during the financial crisis to support the lender in 2008, said it had cut its stake in the bank at a loss, Reuters reported. Shares of the Swiss lender slid 2.1 percent on the news.
British budget airline easyJet reported a worse-than-expected earnings miss for the first half of the year as the weak pound and fierce competition from European rivals took its toll on the company. The U.K.-based airline said strong cost control measures meant it remained on track to meet full-year targets. However, its shares plunged more than 7 percent.
The world’s second-largest mobile operator, Vodafone, posted a 6.1 billion euro ($6.71 billion) loss for the 12 months ending in March. The U.K.-based firm was weighed down by its embattled Indian unit though sought to reassure investors with a rosy earnings outlook and a jump in free cash flow for the current year. As a result, its shares hit the top of the benchmark, trading more than 3.5 percent higher.
Meanwhile, the dollar slumped to its lowest level since the U.S. presidential election in November on Tuesday. The U.S. currency was down 0.4 percent against a basket of currencies, at 98.527, during mid-morning deals. The drop in dollar has sent the euro higher, as political concerns in Europe dissipate.
On Wall Street, the Nasdaq and the S&P 500 climbed to fresh record highs. The Dow Jones industrial average rose 0.11 percent as Home Depot reported better-than-expected earnings.
Franco-German relationship
U.K. inflation data rose to 2.7 percent in April, hitting its highest level since September 2013. Sterling edged to a fresh one-week high on the news though has since pared all of its gains to turn negative.
Euro zone gross domestic product (GDP) was confirmed at 0.5 percent for the first three months of the year, according to the European Union’s statistics office Eurostat. Elsewhere, the mood among German investors improved yet again in May to hit its highest level since July 2015. The ZEW survey showed economic sentiment had increased to 20.6 from 19.5 in the month previous.
German Chancellor Angela Merkel expressed a new openness to far-reaching changes to secure the future of the European Union as she met with newly-elected French President Emmanuel Macron on Monday evening. The two leaders said Macron’s election victory could revitalize the Franco-German relationship, which has long been the engine for binding EU member states.
The outcome of the French presidential election has sparked investors’ appetite for the second largest euro economy. The country has attracted 30 billion euros of orders for a new 31-year bond, the Financial Times reported.
Elsewhere, Britain’s International Trade Secretary, Liam Fox, said Monday the U.K. would be a leading supporter of free trade, despite its plans to depart from the European Union. Fox stressed Britain would not pursue isolationist policies throughout the Brexit process and criticized other nations for a slowdown in international trade.
Source: CNBC
