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Asian Markets at Close Report

European Markets at Close Report

Jul 22, 2016

European Markets at Close Report, by cnbc on July 22, 2016: Stocks End Under Slight Pressure After PMIs, Mixed Earnings

cnbc.com

Alexandra Gibbs, Holly Ellyatt


After a choppy trading session, European equities finished predominantly mixed on Friday, after investors pored over another batch of earnings and digested new PMI figures for the U.K. and the euro zone.

The pan-European STOXX 600 index closed down 0.13 percent provisionally. On the week, however, the index ended on a positive note, up 0.7 percent. Most sectors also ended in negative territory, however, with the exception of telecoms, which popped 1.5 percent.
Looking at major bourses, London's FTSE remained resilient during trade, finishing up 0.4 percent. Meanwhile, France's CAC and Germany's DAX both wavered, finishing roughly flat and down 0.1 percent respectively.

European PMIs shake up sentiment

 
FTSE FTSE 6724.00 24.11 0.36% 526254514
DAX DAX 10132.73 -23.48 -0.23% 48460131
CAC CAC 4373.54 -2.71 -0.06% 54707062
IBEX 35 IBEX 35 Idx 8592.60 9.00 0.10% 223945779

The STOXX 600 saw a choppy start to its session, after a private sector survey showed that business activity in the euro zone did not fall as much as expected in July. A preliminary purchasing managers' index (PMI) for the manufacturing and services sectors in the euro zone came in at 52.9 in July, above expectations for a reading of 52.5 according to analysts polled by Reuters.
Meanwhile, PMI figures for the U.K., compiled by Markit, showed that the services sector slipped to 47.4 from June's 52.3, its lowest since March 2009. The country's flash manufacturing PMI also dropped, down to 49.1, from 52.1 in June. Overall, the figures caused the U.K. sterling to sink against the dollar, trading down over 1 percent at $1.3079 at Europe's close.
Following the U.K. data, Craig Erlam, senior market analyst at OANDA, said it wasn't really a huge surprise to see confidence in both sectors taking a hit following Brexit. However, if the U.K. continues to see these kinds of figures, "the economy could be headed for recession before the year is out," Erlam said.
Consequently, analysts elsewhere are suggesting that this could prompt the Bank of England to do more to stimulate growth in country, at its upcoming meeting in August.
Markets have also been reacting to the European Central Bank's decision on Thursday, when the central bank chose to leave its benchmark refinancing rate at 0 percent. The bank was widely expected to preserve its zero interest rate policy and markets are now anticipating further monetary policy stimulus further down the line from global central banks.
In global markets, Asia finished mostly lower; despite shares of Nintendo and McDonald's Holdings closing higher after the highly popular "Pokemon Go" app finally launched in Japan, following weeks of anticipation. Meanwhile, U.S. stocks wavered, as investors wade through mixed earnings reports.
On the oil front, prices extended losses during trade as investors reassessed U.S. data on oil stocks and concerns of a glut continued to dominate sentiment. Brent was trading around $45.50 in afternoon trade, while U.S. WTI hovered above $44.

Earnings come in full force

Meanwhile, construction firm Skanska sank over 4.5 percent, after its second-quarter earnings came in below expectations. U.K. property stocks also sat near the bottom of the STOXX 600, with Berkeley Group, Bovis Homes and Bellway all sharply lower.
And the banking sector was dragged lower, after Spanish lender Banco de Sabadell warned that's its full-year profit would be slightly below 800 million euros, compared to a target of 1 billion euros in its two year strategic plan, Reuters reported. It's first half net profit also came in below a Reuters forecast. Shares sank 8 percent.
In the retail space, U.K. brand Marks & Spencer slipped over 3 percent, after Barclays downgraded its rating on the stock to "underweight" from "equal weight"; and cut its price target. Swatch Group was also feeling the heat, off 2.5 percent, after UBS, Bernstein, Natixis and Helvea Baader Bank cut their price targets on the luxury brand.