[BENGALURU] European equities edged lower on Friday (Oct 31) as investors absorbed mixed quarterly results and a benign euro zone inflation report that reinforced the European Central Bank’s view that price pressures remain contained.
The pan-European Stoxx 600 index ended down 0.5 per cent, its fourth straight losing session.
However, it wrapped up its fourth consecutive month of gains, and its best since May, as hopes of easing US interest rates, improving trade relations between Beijing and Washington and resilient earnings had powered it to record highs this month.
On Friday, insurers were the biggest decliners, down 1.9 per cent. AXA fell 4.4 per cent after reporting a drop in new business profits in its life insurance business and weaker pricing. Paris-based Scor dropped 13 per cent after reporting third-quarter results, leading losses on the Stoxx S600.
Bank stocks were the only bright spot. Erste Group Bank jumped 5.5 per cent after the lender raised its annual outlook after its third-quarter results, while Danske Bank rose 3.1 per cent after Denmark’s biggest bank reported quarterly net profit slightly above expectations.
Gains in bank stocks helped limit losses on the Spanish and Italian stock exchanges to 0.1 per cent each.
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On the data front, euro zone inflation slowed a touch in October and continued to hover near the European Central Bank’s 2 per cent target, backing its assessment on Thursday that the economy remains on a relatively benign path.
The ECB kept interest rates unchanged at 2 per cent for the third meeting in a row on Thursday, fuelling expectations that they will stay on hold through this cycle.
Barclays on Friday dropped its forecast for a quarter-point rate cut in December, expecting the ECB to keep rates steady.
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“Today’s numbers emphasise that this was probably the right call,” Bert Colijn, an economist at ING, said about the ECB’s Thursday’s decision to keep rates on hold.
The benchmark stock index ended the week slightly lower as traders weighed the chances of fewer interest rate cuts in the US and Europe, a flurry of earnings from US tech heavyweights and a fragile trade truce between China and the US.
“It is positive that the two sides can de-escalate tensions, but we expect to see more bumps on the road,” said Danske Bank analysts. REUTERS
