European shares reverse early losses, positive economic data supports

on Nov 23, 2017

European shares opened in negative territory but turned positive soon after, following upbeat economic data. The positive PMIs helped investors shrug off weaker sentiment that lingered from the overnight slump in Chinese markets.

By 1315 BST, the broader EUROSTOXX 600 was barely changed from the open, after recovering from initial losses. The EUROSTOXX 50, meanwhile, was trading 0.24% higher.

In the regional bourses, the French CAC and Spanish IBEX were both 0.5% in the green. The German DAX, meanwhile, swung back into negative territory and was 0.2% lower.

Euro-Zone PMIs impress

The preliminary calculation of the Markit PMIs for Germany, France and the broader euro zone, helped boost investor sentiment earlier Thursday.

The French composite PMI – which combines the readings for the services and manufacturing sectors – rose to a more than six-year high of 60.1 in November.

The German composite PMI was a little less impressive, rising to a two-month higher of 57.6. Germany’s manufacturing sector, however, did wow, with the specific manufacturing PMI index up at an 81-month high of 62.5.

That combined to lift the broader euro zone measure. IHS Markit reported the preliminary composite euro zone PMI climbed to a six-and-a-half year high of 57.5 in November.

“The message from the latest euro zone PMI is clear: business is booming,” said Chris Williamson, IHS Markit’s chief economist. “Growth kicked higher in November to put the region on course for its best quarter since the start of 2011.”

“The PMI is so far running at a level signalling a 0.8% increase in GDP in the final quarter of 2017, which would round-off the best year for a decade,” Williamson added.

Leading gainers

Among the top European share performers Thursday were:

  • French telecoms group Altice. Shares rose 5.5% on news the business was looking to sell its Dominican Republic network.
  • Telecom Italia shares gained 5.3% on news of a possible network ‘spin-off’.
  • Shares in Thyssenkrupp, meanwhile, reversed earlier losses to trade 1.6% higher.

Trading was on the thin side Thursday, due to the two-day US Thanksgiving holiday beginning today.