During the trading session on Thursday, the key stock exchange indicators of Western European countries show steady growth following a two-day drop. So, by the time of writing, the aggregate indicator of the leading companies in Europe, the STOXX Europe 600, increased by 0.4% to 440.28 points. The French CAC 40 increased by 1% to 6479.98 points, while the German DAX gained 0.76% and is balancing at the level of 14455.24 points. The UK stock market is closed on Thursday due to a bank holiday. The value of securities of the French producer of alcoholic beverages Remy Cointreau SA increased by 4%. For the fiscal year 2022, which ended in March, the company's revenue soared by a record 30%. The share price of the Swedish automotive company Volvo Car AB decreased by 0.1%. The day before, the company reported that in May, the level of decline in sales of its products increased by 28.3% year-on-year. The main reason for such spectacular negative dynamics, Volvo management called the negative impact of disruptions in logistics and strict restrictive measures in China.
Current market situation
The focus of European traders' attention on Thursday is the upcoming OPEC+ meeting, which will determine the prospects for energy companies' securities. In addition, traders continue to analyze statistical data on inflation in the region. Thus, according to the Statistical Office of the European Union, in the past month, the level of consumer prices in the region soared by 8.1% in annual terms. At the same time, market analysts surveyed earlier predicted an increase of only 7.7%. By the way, the result obtained in May was a record in the history of calculations and exceeded the target of the European Central Bank (2%) by more than four times. Investors are worried that this state of affairs may become a weighty argument in favor of an increase in base interest rates in the eurozone. The next ECB meeting is scheduled for June 9, while traders are watching the comments of the central bank, hoping to get signals about the scale of the increase in key rates.
Wednesday 's results
As for the results of trading the day before, on Wednesday, European stock exchange indicators showed a decline amid falling US stock markets and the release of worse-than-expected macroeconomic statistics for the region. As a result, the aggregate indicator of the leading companies in Europe, the STOXX Europe 600, decreased by 1.04% to 438.72 points. The British FTSE 100 indicator sank by 0.98% to 7532.95 points, the French CAC 40 lost 0.77% and stopped at 6418.89 points, and the German DAX decreased by 0.33% to 14340.47 points. The value of securities of the British shoe manufacturer Dr. Martens Plc soared by 20% ahead of the release of data that by the end of the 2022 fiscal year, the company's pre-tax profit tripled and revenue increased by 17.5%. The share price of the German investment company DWS sank by 6.2%. The main reason for the drop in quotes was the news about the resignation of DWS CEO Asoka Woehrmann. The day before, the country's law enforcement agencies conducted searches at Deutsche Bank and its asset management subsidiary. The capitalization of the British oil company Tullow Oil PLC decreased by 2%. Earlier, the management of Tullow Oil PLC announced the conclusion of a merger agreement with the British oil and gas exploration and development company Capricorn Energy PLC. According to the preliminary assessment of market experts, the value of the combined company may amount to about $1.79 billion.
Reasons for market decline
The key reason for the pessimism of European investors the day before was the increased concern about a more rapid tightening of monetary policy by the US Federal Reserve. So, earlier information was published that in the past month the indicator of business activity in the industry of the United States increased to 56.1% from April 55.4%. Traders took the latest statistics as an indicator of the strengthening of the American economy, which could provoke the Fed to tighten monetary policy. Macroeconomic statistics for the region also became an additional downward factor for the stock markets of Western European countries. Earlier, the Federal Statistical Office of Germany reported that in April the level of retail sales in the country fell by 5.4% compared to March. The published rate of decline in the indicator has become the highest over the past year. At the same time, analysts predicted a decrease of only 0.2%. The PMI indicator – the index of industrial activity in Germany – rose in May to 54.8 points from April's 54.6 points. At the same time, experts predicted an increase in the index value to 54.7 points. As for the statistics for the UK, in May, the level of retail sales there continued to grow. According to the British Consortium of Retailers, this indicator soared by 2.8% last month against an increase of 2.7% a month earlier. At the same time, the pace of the May increase in the level of retail sales was the highest since the summer of 2011. The industrial PMI in the eurozone sank in May to 54.6 points from April's 55.5 points, which was the lowest since the autumn of 2020. According to a preliminary estimate, this indicator was 54.4 points
