Europe midday: Markets subdued after sell-off as data comes in mixed

(Sharecast News) - European stocks were swinging between gains and losses on Tuesday morning as investor sentiment remains dampened by Monday's sell-off due to economic concerns in the US and the unwinding of yen carry trades. Global stock markets fell sharply on Monday, with New York's Dow shedding more than 1,000 points (-2.6%) and Japan's Nikkei 225 plummeting 12.4% - its worst intraday decline since 1987 - while Europe's Stoxx 600 dropped 2.2% to settle at a six-month low of 487.05.

The pan-European benchmark was up just 0.1% at 487.62 by lunchtime in Europe, having dipped into the red by mid-morning before erasing earlier losses. Small gains in Frankfurt and a flat performance in London was just about offsetting negative moves in France, Milan and Madrid.

Meanwhile, futures on Wall Street were pointing to a small rebound ahead of the opening bell, while stocks in Tokyo surged more than 10%.

"Financial markets have steadied overnight, bringing some relief for investors following yesterday's near melt-down," said analyst David Morrison from Trade Nation.

"Already, some commentators are insisting that the worst is over. Fears of a US recession are overdone, the Fed will soon be cutting interest rates (probably quite aggressively), a lot of the froth has been blown off the tech sector and investors have all unwound their yen-based carry trades painlessly."

Economic data was in focus in Europe after the first rise in German factory orders this year. According to figures from the Federal Statistical Office, orders were up 3.9% over the month, well ahead of the 0.8% increase expected by economists. This was the first monthly increase since December 2023.

The S&P Global/CIPS UK construction PMI also came in ahead of forecasts, rising from 52.2 to 55.3 in July, beating the 52.7 reading expected by the market. However, the eurozone HCOB construction PMI dipped to 41.4 from 41.8.

In other news, retail sales in the eurozone fell more than expected in June, declining 0.3% after a 0.1% gain the previous month; economists had pencilled in a drop of just 0.1%.

"Today's mixed data docket supports our view of a somewhat less positive growth momentum than previously assumed," said Paolo Grignani, senior economist at Oxford Economics. "Growing concerns about the state of the [eurozone] economy and the lack of a pick-up in the manufacturing sector have led us to revise down our eurozone GDP growth forecasts for 2025, amid growing signs that the ECB has overtightened."

Market movers

Shares in Monte dei Paschi rose 8% after the Italian bank upgraded its payout ratio following a strong second quarter, and signalled it was close to selling its French arm MP Banque. The bank said it would give shareholders 75% of its pre-tax profit this year, up from an earlier payout ratio of 50%, after first-half gross operating profits jumped 18%.

In London, InterContinental Hotels rallied after saying underlying profits improved by 12% in the first half due to solid margin improvements and an acceleration in RevPAR growth in the second quarter.

UK-listed online real estate portal operator Rightmove was the worst performer on the Stoxx 600, falling 5% after parting way with lettings platform OpenRent, with their partnership due to expire next month. The company assured investors that its FY24 trading performance would not be affected.