. European Markets Rise on Strong Earnings, ECB Decision - 12 May

European Markets Rise on Strong Earnings, ECB Decision – 12 May

European Markets Rise on Strong Earnings, ECB Decision – 12 May

12 May 2023

European Stock Markets Rise on Strong Earnings and ECB Decision, Ahead of US Jobs Report.

Adidas AG Share price slumped 0.32% today at $166, European stock markets opened higher on Friday, as investors assessed the latest corporate news and the European Central Bank’s (ECB) monetary policy decision ahead of the key US jobs report. Despite the mixed economic data, European stock markets remained bullish, with the DAX in Germany trading 0.3% higher, the FTSE 100 in the UK climbing 0.4%, and the CAC 40 in France rising 0.4%.

Strong Corporate Earnings

The earnings season continues in Europe, with Adidas (ETR: ADSGN) stock surging over 7% after the German sportswear giant reported better-than-expected first-quarter numbers, boosting hopes that it is turning its fortunes around. IAG (LON: ICAG) stock rose 4% after the British Airways owner raised its 2023 profit forecast, following a surprise first-quarter profit on the back of strong ticket sales for summer and a winter season that exceeded expectations.

Air France KLM (EPA: AIRF) also reported better-than-expected first-quarter revenue and robust cash flow, but its stock slumped 3.6% after the airline decided against providing a full-year profit forecast. CaixaBank (BME: CABK) stock rose 1.8% after the Spanish lender reported a significant increase in net profit in the first quarter from a year ago, driven by a strong increase in lending income and a solid performance of its insurance business.

InterContinental Hotels Group (LON: IHG) stock fell 2.7% after the hotel operator announced that CEO Keith Barr would step down from his role next month, overshadowing first-quarter results buoyed by a recovery in Greater China. Despite these mixed results, the market remained bullish on the back of strong earnings reports from Apple (NASDAQ: AAPL), which exceeded market expectations.

ECB Decision

The ECB announced its decision to slow the pace of its policy tightening on Thursday, delivering a quarter percentage point increase. While ECB President Christine Lagarde indicated that the central bank is not done with rate hikes yet, the bank also noted that previous increases were being “transmitted forcefully” into financing and monetary conditions.

Investors are still digesting the implications of the ECB decision, which may have contributed to the positive sentiment in the European markets. However, evidence of deteriorating economic conditions came with the release of German factory orders, which slumped 10.7% the month in March, a drop from the revised 4.5% growth the prior month.

US Jobs Report

The major economic release on Friday was the US monthly jobs report, which showed that nonfarm payrolls rose 266,000 in April, beating expectations and marking a rebound from the previous month’s lackluster report. The unemployment rate rose slightly to 6.1%, while the labor force participation rate remained unchanged at 61.7%. The upbeat report added to the positive sentiment in global markets.

Oil and Gold Prices

Oil prices rose on Friday, but remained on course for a third straight weekly loss due to concerns over slowing growth, which may be exacerbated by the turmoil in the US banking system and its impact on crude demand. By 04:00 ET, US crude futures traded 1.4% higher at $69.55 a barrel, while the Brent contract climbed 1.5% to $73.58. For the week, Brent was set to close down over 7%, while WTI was set to close 9% lower.

Gold futures edged 0.4% lower to $2,048.35/oz, as the US dollar strengthened against major currencies,