By Carla Mozee, MarketWatch
Lufthansa shares soar; Credit Suisse earnings beat
expectations
European stocks closed modestly higher Tuesday, with markets
wrapping dealings in July by absorbing a new round of corporate
earnings reports, including well-received results from Swiss
banking heavyweight Credit Suisse.
Updates on inflation and economic growth figures from the
eurozone were in focus, and investors cheered the possibility of
trade talks restarting between the U.S. and China.
How markets performed
The Stoxx Europe 600 indexclosed up 0.2% at 391.61, overcoming
choppy action during the session. The oil and gas and basic
materials groups were top advancers, while the technology and
telecommunications sectors lost the most ground. On Monday, the
index fell 0.3%
(http://www.marketwatch.com/story/european-stocks-fall-from-6-week-high-as-trade-tech-woes-linger-2018-07-30)
For July, the pan-European benchmark ended up by 3.1%, the first
monthly gain since April.
The U.K.'s FTSE 100 index advanced 0.6% to end at 7,748.76,
topped by mining stocks which are sensitive to developments
surround China, a major metals consumer. France's CAC 40 index
closed up 0.4% to 5,511.30, and ended July higher by 3.5% for the
month.
Germany's DAX 30 index ended Tuesday's session up by just 0.1%
at 12,805.50, held back in part by a slump in shares of Fresenius
SE & Co. KGaA. But the index closed July up by 4.1%, its best
month since April.
Spain's IBEX 35rose 0.1% to 9,870.70, notching a monthly advance
of 2.6%.
The euro pulled back to trade at $1.1708, little changed from
late Monday in New York.
What drove markets
Stocks wavered during the session as investors tackled a slew of
corporate financial results. Among big names, Swiss lender Credit
Suisse's second-quarter profit beat expectations, putting it on
track for its first annual profit in four years.
Mining shares emerged as strong performers Tuesday following a
Bloomberg News report
(https://www.bloomberg.com/news/articles/2018-07-31/u-s-china-said-to-seek-to-restart-talks-to-defuse-trade-war)
that representatives of U.S. Treasury Secretary Steven Mnuchin and
Chinese Vice Premier Liu He are privately discussing how to
re-engage in negotiations aimed at averting a full-blown trade war
between the world's largest economies. In May, Mnuchin traveled to
Beijing with a trade delegation for two days of talks.
Following on U.S. President Donald Trump's threat of tariffs,
the U.S. in July imposed a duty of 25% on $34 billion of Chinese
goods, and China responded in kind.
"The U.S. and China have been involved in a tit-for-tat trade
spat for the last few months which has weighed heavily on sentiment
across the markets. So far there has yet to be positive conclusion
from any of Trump's trade talks, but that is not preventing
optimism flowing back into the markets," said Fiona Cincotta,
senior market analyst at City Index, in a note.
Miners can be sensitive to developments in China, which is the
world's largest consumer of copper, an industrial metal. The Stoxx
Europe 600 Basic Resources Index climbed 1.2%.
Inflation and GDP in focus
The eurozone's economy slowed further in the three months
through June, as exports sputtered and business confidence weakened
on worries over trade tensions.
Gross domestic product in the eurozone grew 2.1%
(http://www.marketwatch.com/story/eurozone-gdp-slows-again-inflation-rises-to-21-2018-07-31)
in the second quarter, year-over-year, Eurostat said in a
preliminary reading report Tuesday. Forecasts were for a 2.2% gain,
according to a FactSet consensus survey. GDP expanded by 0.3% from
the first quarter, compared with expectations for 0.4%.
That lackluster GDP performance contrasts with accelerating
economic growth in the U.S. If it continues, the divergence could
widen the gap between U.S. and eurozone interest rates.
Eurostat also released a reading on eurozone inflation for July,
which rose to 2.1%, further above the European Central Bank's
target. The forecast was for a 2% gain, year-over-year. French
inflation in July was up 2.3%
(http://www.marketwatch.com/story/french-inflation-rises-more-than-seen-in-july-2018-07-31),
more than the 2.1% rate anticipated in a Wall Street Journal poll
of economists.
In a separate release, Eurostat said the unemployment rate
across the eurozone was unchanged at 8.3% in June. However, the
number of people without work grew slightly for the first time
since July 2017, a sign the economic slowdown may already be
weakening the jobs market.
Elsewhere on the economic docket, German jobless claims dropped
by 6,000 in July
(http://www.marketwatch.com/story/german-jobless-claims-fall-but-less-than-expected-2018-07-31)
compared with June, the Federal Employment Agency said. Economists
polled by The Wall Street Journal had forecast a decline of
10,000.
Stock movers
Deutsche Lufthansa AG shares (LHA.XE) rallied 8.3% as the German
airline raised its unit-revenue forecast for the year.
(http://www.marketwatch.com/story/lufthansa-lifts-revenue-forecast-shares-rise-2018-07-31)
(http://www.marketwatch.com/story/lufthansa-lifts-revenue-forecast-shares-rise-2018-07-31)Travis
Perkins PLC shares (TPK.LN)tumbled 10.8%. The British building
products supplier warned that its earnings will be at the lower end
of analyst expectations
(http://www.marketwatch.com/story/travis-perkins-warns-on-earnings-launches-review-2018-07-31)
because of a challenging consumer market, and said it's launching a
review of its business.
Credit Suisse Group AG shares (CSGN.EB) gained 1.1% as the
lender said second-quarter net profit more than doubled
(http://www.marketwatch.com/story/credit-suisse-net-profit-more-than-doubles-2018-07-31-24853659)
to 647 million Swiss francs, above expectations of 596 million
Swiss francs.
Fresenius SE & Co. KGaA shares (FRE.XE) slumped 4.3%, the
biggest loss on the DAX 30. The German health care company's
second-quarter net profit surged 45%
(http://www.marketwatch.com/story/fresenius-net-profit-jumps-backs-2018-outlook-2018-07-31).
But Fresenius also said it expects that it will be early next year
when it can resolve a Delaware court case over Fresenius's decision
to pull out of a merger deal with drugmaker Akorn Inc. (AKRX).
Vivendi SA (VIV.FR) shares rose 3.7%. The French media group
posted better-than-expected earnings and said that it's looking to
sell a stake of up to 50% in Universal Music Group
(http://www.marketwatch.com/story/vivendi-shares-rise-on-earnings-beat-umg-sale-2018-07-31).
BP PLC (BP.LN) (BP.LN) shares closed up 1.4% after the energy
giant posted second-quarter results
(http://www.marketwatch.com/story/bp-profit-soars-as-rosneft-upstream-unit-deliver-2018-07-31).
The company said Tuesday that its equivalent to net income more
than tripled in the second quarter, propelled by higher earnings in
its upstream business and Rosneft Oil Co.
(END) Dow Jones Newswires
July 31, 2018 14:10 ET (18:10 GMT)
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