European Markets on The Rise as Positive Momentum Builds

European markets advanced on Thursday, continuing the positive momentum seen in the previous session. Investors were encouraged by positive economic data and corporate earnings reports.
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The Stoxx 600 was up 0.4% by late morning, with retail stocks adding 1.5% to lead gains. Food and beverage stocks bucked the trend to slide 1.1%.
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This week's data showing improved business sentiment in Germany and an uptick in eurozone services and manufacturing activity has buoyed markets, prompting optimism that a recession in the eurozone might be avoided.
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In Asia-Pacific markets, shares were mixed on Thursday as investors considered a range of economic data. Meanwhile, S&P 500 futures rose modestly as investors reviewed the latest corporate earnings reports.
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Investors around the world are eagerly awaiting the release of the first estimates of U.S. fourth-quarter GDP on Thursday. This data will give insight into the health of the world's largest economy and could have a significant impact on global financial markets.
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Diageo, the world's largest spirits maker, reported better-than-expected sales for the first half of the year, thanks to higher prices and increased demand for premium spirits.
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"Our portfolio performed well across all regions, with double-digit growth in our most expensive products," Ivan Menezes told CNBC's "Squawk Box Europe."
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The fundamentals of our consumer base are strong. People are enjoying spirits more than ever and drinking better, not more. This is good news for the future of the spirits industry.
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At 10:30 a.m. London time, Diago shares were down around 6.7%.
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James Morton, CIO of Santa Lucia Asset Management, has stated that the “Biden team need to look at the numbers because they obviously don’t know what they’re talking about.” This is in regards to the team's lack of knowledge on the current state of the economy.
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Corporate earnings were the main driver of individual share prices in Europe on Thursday morning.
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Sartorius' stock rose 8% after the company released its full-year earnings report. Diageo, on the other hand, saw its stock fall 5% to the bottom of the Stoxx 600 after its first-half results were announced.
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As stocks continue to rise, some of the world's biggest financial institutions are now predicting a sharp drop in global equity markets.
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Since October of last year, the S&P 500 index has increased by more than 10%. In Europe, the STOXX 600 has increased by more than 15% over the same period. These are both significant increases that show that the market is recovering from its lows.
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However, according to some investment banks, the recent gains in the stock market are now at risk. These banks fear that the lagged effects of monetary tightening will hit earnings and cause compression in profit margins this year.
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Stocks in certain key sectors that are directly related to China’s reopening, such as domestic consumption and travel, have performed well in recent months.
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Investors who are looking for ways to profit from the reopening of the Chinese economy may find that the stocks of companies directly involved in that process are currently overvalued. However, there are other companies that stand to benefit from the reopening of China that may be a better investment at this time. Bank of America and UBS have identified a number of these companies, which could provide a good opportunity for investors looking to profit from the reopening of China.
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The Ifo Institute's monthly survey of German businesses showed an improvement in sentiment this month. The Munich-based institute's survey is closely watched by economists and policymakers.
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The group's Business Climate Index rose to 90.2 points from 88.6 points on "considerably less pessimistic expectations," a release said. Companies in the services sector also reported lower satisfaction with their current situation. However, this was still below the index's 2021 and early 2022 levels.
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However, manufacturing firms signaled improved present satisfaction and future optimism, and there was improved sentiment for trade. This suggests that the manufacturing sector is starting to see some improvements, which is good news for the economy as a whole.
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Clemens Fuest, president of the Ifo, told CNBC's Arabile Gumede that the expectation was that there might be a recession in the fourth quarter of '22 and the first quarter of '23. However, it now appears that the last quarter was flat.
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"Although the economy may still be contracting slightly in the first quarter, the improvement in business confidence suggests that a technical recession is unlikely."
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The electric vehicle industry is seeing a resurgence, thanks in part to China's reopening. According to one analyst, this trend is expected to continue into the second half of the year. This is good news for the industry, which has seen electric vehicle sales slump in recent years.
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Corinne Blanchard, vice president of lithium and clean tech equity research at Deutsche Bank, has named one top stock pick.
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European markets are set to open higher on Thursday, building on the positive momentum seen in the previous trading session.
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This week's data showing improved business sentiment in Germany and an uptick in eurozone services and manufacturing activity has buoyed markets.
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According to data from IG, the U.K.'s FTSE 100 index is expected to open 20 points higher at 7,760, Germany's DAX 80 points higher at 15,158, France's CAC up 32 points at 7,075, and Italy's FTSE MIB 94 points higher at 26,053.
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Revenue for LVMH, STMicro, Diageo, Superdry, and Banco Sabadell will be released today. Italian consumer confidence data for January will also be released.