Commodity Earnings Stock Share Europe
European markets started the week practically flat as rising commodity prices boosted oil and mining sectors, but fears about inflation and the forthcoming earnings season dampened confidence. In early trade, the Stoxx 600 index fell 0.02 percent, with travel and leisure plunging the most. Gains in banking and commodity-linked companies like energy and mining, on the other hand, helped minimise losses.
- Brent crude rose over 1% to US$83.59 a barrel as the global energy crisis continued to worsen, while Dalian coking coal hit a contract high as recent floods in China’s top coal-producing Shanxi region heightened supply concerns.
- Asos, a British online apparel retailer, fell 14.2% after warning that increasing logistical costs and supply chain disruptions might cause 2022 profits to collapse by more than 40%, and CEO Nick Beighton announced his resignation.
- Adler Group, a German real estate investor, fell 1.3% after agreeing to sell residential and commercial property worth 1.49 billion euros (S$2.33 billion).While the significant presence of commodity-related businesses on European exchanges helped minimise losses, investors were concerned that rising raw material costs might damage corporate profitability as earnings season approached. U.S. banks will begin their quarterly reporting season, with investors expecting a slowdown in profit growth in the third quarter compared to the previous quarter’s explosion. According to Refinitiv IBES statistics, third-quarter profit growth in the United States is expected to be 29.6%, while profit growth in Europe is expected to be 45.6 percent.The CAC 40 traded slightly down around 6,540, in line with its European peers, as investors weighed rising inflationary pressures against the potential of slower global growth and higher interest rates. Exploratory negotiations between French retailers Carrefour and Auchan over possible tie-up scenarios failed due to differences over the deal structure being too difficult to overcome on the corporate front.As investors raised interest rate forecasts, the banking index rose to its highest level since February 2020, recouping nearly all of its pandemic-related losses. The European Central Bank is expected to raise rates by 10 basis points by the end of next year, according to money markets. HSBC, Lloyds Banking Group, Barclays, and Natwest Group all gained roughly 1% after hawkish comments from Bank of England officials prompted traders to boost their bets on an interest rate hike in November.
Among the stocks, ASOS, a British online apparel retailer, fell 9.8% after warning that increasing logistical costs and supply chain disruptions might cause profitability to decline by more than 40% by 2022, according to Chief Executive Officer Andrew Bailey.