Oct 1, 2020

European Markets Closing Report: European stocks close slightly higher, tracking gains on Wall Street; Bayer slides 12%


Elliot Smith, Holly Ellyatt

LONDON — European stocks advanced cautiously on Thursday, tracking gains on Wall Street, with economic data and corporate earnings in focus.

.FTSEFTSE 100FTSE5881.2615.160.26487325728
.FCHICAC 40 IndexCAC4821.7618.320.3862827095

The pan-European Stoxx 600 closed 0.2% higher, with retail stocks adding 2.4% while oil and gas stocks slid 1.7%.

The mood in Europe is following a trend in the U.S., where stocks rose as investors braced for the start of the fourth quarter with hopes of fiscal stimulus.

In Asia, Japan’s Tokyo Stock Exchange halted trading on Thursday due to a technical issue, while many major markets in the region (those in China, Hong Kong, South Korea and Taiwan) were closed for holidays. Markets in Singapore, Australia and India all closed higher.

The pandemic continued to dominate investor sentiment with news on potential coronavirus vaccines being followed closely. Drugmaker Moderna’s CEO said he doesn’t expect to apply for an emergency use authorization with the Food and Drug Administration for the company’s potential Covid-19 vaccine until after the U.S. presidential election on Nov. 3.

Speaking to the Financial TimesCEO Stephane Bancel said: “November 25 is the time we will have enough safety data to be able to put into an EUA (emergency use authorization) file that we would send to the FDA — assuming that the safety data is good, i.e. a vaccine is deemed to be safe.”

Meanwhile, Italy extended its state of emergency until January, while the U.K. will extend localized restrictions in northern England in response to a recent spike in coronavirus cases.

Europe data

European data was also in focus Thursday morning. The final September manufacturing PMI (purchasing managers’ index) reading for the euro zone was in line with forecasts at 53.7, indicating a continued recovery for the bloc’s factory activity, fueled largely by industrial powerhouse Germany.

Meanwhile, the euro zone August jobless rate increased 0.1% month-on-month to 8.1%. 

The European Union on Thursday began legal action against the U.K. after British lawmakers approved plans to override the Brexit Withdrawal Agreement despite admissions from some cabinet ministers that the move would violate international law.

Biggest movers

Earnings were a key driver of individual share price movement on Thursday, with Swedish retailer H&M climbing 6% after beating third-quarter forecasts. French-Italian chipmaker STMicro added 7% after upbeat results, which also sent German rival Infineon 7.5% higher.

At the bottom of the European blue-chip index, Rolls-Royce fell more than 10% after the airplane engine manufacturer announced plans to raise $6.5 billion to survive the coronavirus crisis.

Bayer shares plunged more than 12% after the German pharmaceutical giant announced further cost cuts and impairment charges, revising down its guidance.

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