Markets

European markets close slightly higher with trade and earnings in focus

Key Points
  • China is reportedly pressing U.S. President Donald Trump to roll back tariffs the U.S. imposed in September before a "phase one" trade deal is signed between the world's two biggest economies.
  • IHS Markit PMI (purchasing managers' index) data for the euro zone rose to 50.6 in October from 50.1 in September.
  • Market focus is also largely attuned to corporate earnings.

European markets edged cautiously higher on Wednesday as investors continue to await direction on U.S.-China relations and react to corporate earnings.

The pan-European Stoxx 600 was provisionally closed 0.12% higher, with stocks in the baskets of autos, construction and basic resources struggling the most. Chemicals and food & beverages logged positive gains.

The FTSE 100 in London closed almost exactly flat for the day at 7387.

China is reportedly pressing U.S. President Donald Trump to roll back tariffs the U.S. imposed in September before a "phase one" trade deal is signed between the world's two biggest economies.

UN economists warned in a report on Tuesday that the Sino-U.S. trade war was a "lose-lose" situation, costing China $35 billion in the first half of this year while U.S. consumers and companies bore the brunt of the most expensive tariffs.

Meanwhile, Reuters reported on Tuesday that finalizing a location for a meeting between Trump and Chinese leader Xi Jinping has become another hurdle for the deal.

However, traders are largely optimistic that the preliminary agreement could be signed as early as this month.

Asian shares traded mixed on Wednesday, with MSCI's Asia-Pacific index excluding Japan edging slightly lower. Singapore's Straits Times index led regional gains, adding 0.3%.

Back in Europe, IHS Markit PMI (purchasing managers' index) data released on Wednesday for the euro zone business activity rose to 50.6 in October from 50.1 in September, a slightly better-than-expected rate of expansion. A score of 50.0 represents zero growth, however, so the euro zone economy remained close to stagnation.

Germany remained inside contraction territory, while France outperformed its peers to reach a two-month high of 52.6.

Earnings in focus

Market focus is also largely attuned to corporate earnings.

Societe Generale on Wednesday posted a net income of 854 million euros ($945 million) for the third quarter, slightly below expectations, but saw its shares rise 3.1% as traders took heart from the French lender's robust capital position.

Adidas, meanwhile, reported a 6% year-on-year increase in sales and flat operating profit, confirming its full-year outlook. CEO Kasper Rorsted said in a press release Wednesday that 2019 would be a record year for the German athletic wear brand. However, shares slid 5.1% as the results failed to excite investors.

BMW shares moved 0.84% higher after reporting a 33% rise in third-quarter operating profit. The German carmaker reiterated that it expects a significant fall in group pre-tax profit for the year.

Marks & Spencer saw its shares fall 0.19% after reporting a 52% rise in profit for the first half of the year.

At the bottom of the European blue-chip index, Danish services group ISS plunged 20.1% after cutting its forecast, placing the stock on course for its worst day ever.

Dialog Semiconductor shares slumped 6.7% after the German chipmaker's fourth-quarter guidance.