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What’s happening: European stocks closed mostly lower on Thursday as investors digested the latest batch of earnings reports.
What happened: Automaker stocks recorded losses after US electric vehicle maker Tesla released a weak quarterly report.
However, equities from one of the major European regions settled slightly higher on Thursday.
Why it matters: European stocks extended losses for the second session in a row with automakers shedding approximately 3.7%. This marked their worst single-session decline in five months and was triggered by Tesla reporting disappointing quarterly results.
The EV maker reported a decline in net income for the first quarter and announced plans for further price cuts. Shares of Renault fell around 8% on Thursday, despite the company reported 29.9% growth in revenues for the first quarter, which topped market expectations.
Sweden’s Volvo also reported growth in its adjusted operating income and boosted its projections for the North American and European heavy-duty truck markets.
Investors remained concerned about further rate hikes by the ECB (European Central Bank), following hawkish comments from the central bank’s policymakers. ECB President Christine Lagarde said that the region’s inflation rate was too high compared to the bank’s 2% target.
Better-than-expected economic data also failed to provide a boost to the markets on Thursday. Eurozone’s consumer confidence indicator rose 1.6 points to -17.5 in April, the highest level since February 2022, and topped market estimates of -18.5. The Eurozone recorded a trade surplus of €4.6 billion in February, versus a year-ago deficit of €9.4 billion, notching the first trade surplus since September 2021.
Investors were concerned about the Bank of England’s interest rate decision, after inflation rate in the UK surprisingly remained above the 10% level in March. However, UK’s FTSE 100 gained 0.05% to close at 7,902.61 on Thursday.
The STOXX Europe 600 Index slipped 0.15% to close at 467.43 on Thursday, with shares of Nordic Semiconductor dropping around 20% to hit bottom of the European index after the company reported downbeat sales results for the first quarter.
The pan European index is on course to the end the week on a positive note and record gains for the month with the easing of banking concerns.
Germany’s DAX 40 fell 0.62%, while France’s CAC 40 closed lower by 0.14% on Thursday.
What to watch: Investors will continue monitoring major earnings reports, which are expected to provide further direction to the stock markets today.
Data on manufacturing, services and composite PMIs will remain in focus. The S&P Global Eurozone manufacturing PMI, which fell to 47.3 in March from 48.5 in the prior month, is expected to rise to 47.9 in April. Analysts expect services PMI edging lower to 54.8 in April, versus March’s reading of 55.
Context: Shares of Nokia fell on Thursday, after the company reported weaker-than-expected profits for the January-March period.
Details: Nokia is one of the major suppliers of 5G technology in the world. The company, however, warned that it was seeing a slowdown in demand for its 5G gear, with the economic environment impacting customer spending.
The company’s adjusted operating profits came in at €479 million for the quarter, below market expectations of €544 million. Its adjusted earnings came in at 6 cents per share, missing estimates of 7 cents per share. Sales rose by 10% to €5.9 billion.
Nokia’s operating margins widened by 70 bps to 7.3%, while comparable operating margins shrank by 270 bps to 8.2%.
The company’s board proposed a quarterly dividend of 3 cents per share, up from the current 2 cents per share.
Nokia reiterated its fiscal 2023 net sales guidance of €24.6-€26.2 billion and said it expects comparable operating margins of 11.5%-14.0%.
How shares responded: Nokia’s shares fell 9.1% to close at $4.20 on the NYSE on Thursday, following the release of quarterly results. The stock has lost around 10% over the past month.
What are expectations: Markets will keep an eye on the current economic situation, which is expected to significantly impact the demand for 5G gear.
Other Markets: US trading indices closed lower on Thursday, with Dow Jones index, S&P 500 and Nasdaq 100 down by 0.33%, 0.60% and 0.78%, respectively.
Russia’s defence ministry said a Moscow fighter jet accidentally bombed its own city of Belgorod near the Ukraine border. The safe-haven US dollar index fell slightly this morning.
Japan’s manufacturing PMI rose to 49.5 in April, versus 49.2 in March, signalling the strongest reading since October last year, which lent support to the JPY/USD forex pair.
Australia’s manufacturing PMI fell to 48.1 in April, from 49.1 a month ago, sending the AUD/USD pair lower in forex trading this morning.
Argentina reported a trade deficit of $1,059 million in March, versus a surplus of $271 million in the year-ago period, exerting pressure on the ARS/USD forex pair.
South Korea’s producer prices rose by 3.3% year-over-year in March, versus a 4.8% increase in the prior month. The news sent the KRW/USD pair lower in forex trading this morning.
UK’s retail sales, manufacturing PMI, services PMI and composite PMI, France’s manufacturing PMI, services PMI and composite PMI, Germany’s manufacturing PMI, services PMI and composite PMI, Italy’s construction output, Eurozone’s government deficit to GDP ratio and government debt to GDP ratio, India’s value of loans, value of deposits and foreign exchange reserves, Canada’s retail sales, as well as US manufacturing PMI, services PMI, composite PMI and Baker Hughes crude oil rigs.
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