Eurozone preliminary PMIs show slowing growth in October
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A pan-European stock benchmark closed lower Tuesday after two days of gains, weighed down by earnings-driven drops for Swedish miner Boliden AB and hospitality chain Whitbread PLC.
National equity gauges for Europe's biggest economies edged higher, as data showed a slowing in the eurozone economy ahead of a closely watched European Central Bank meeting later in the week.
What stock indexes are doing
The Stoxx Europe 600 index fell 0.4% to end at 389.33, erasing part of its recent advance. On Monday, the pan-European benchmark rose 0.2% (http://www.marketwatch.com/story/spanish-stocks-lower-as-catalan-standoff-continues-but-dax-eyes-record-2017-10-23) for a second straight session of gains, as a drop in the euro appeared to give stocks a lift.
The euro was buying $1.1763, little changed from $1.1751 late Monday in New York.
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Germany's DAX 30 index tacked on 0.1% to finish at 13,013.19, while France's CAC 40 added 0.2% to close at 5,394.80.
In London, the FTSE 100 turned up by less than 0.1% to end at 7,526.54.
What's driving markets?
While the national indexes displayed little action, a number of individual stocks showed big moves as earnings arrived.
Investors may also be holding off on making a move ahead of the European Central Bank's policy decision on Thursday, where ECB President Mario Draghi is widely expected to outline a plan to begin tapering the central bank's bond purchases. But there seems to be little consensus among analysts as to what shape this will take.
See:Mario Draghi needs to avoid a 'taper tantrum' when the ECB meets (http://www.marketwatch.com/story/mario-draghi-needs-to-avoid-a-taper-tantrum-when-the-ecb-meets-2017-10-23)
What strategists are saying
"[The euro] remains in a holding pattern ahead of the ECB's decision this Thursday, where our economists expect a dovish taper," said Sue Trinh, head of Asia currency strategy at RBC Capital Markets.
Shares of Apple supplier AMS AG (AMS.EB) soared 22% as the chip company forecast "very strong" fourth-quarter revenue growth, with sales to come in at EUR440 million to EUR480 million (http://www.marketwatch.com/story/ams-shares-jump-more-than-20-as-quarterly-sales-surge-2017-10-24). Third-quarter group revenue was EUR262.6 million, up 79% from EUR146.7 million a year ago.
Boliden AB shares (BOL.SK) stumbled 6.6% after third-quarter earnings from the Swedish mining company missed analysts expectations. The company also said Chief Executive Lennart Evrell will step down in 2018.
Whitbread PLC shares (WTB.LN) lost 4.8% on Tuesday. The hospitality chain operator reported a rise in group sales and revenue, but a slowdown in like-for-like sales growth at its Costa high-street coffee outlets.
Covestro AG (1COV.XE) jumped 8.2%. The German specialty chemicals company said it plans to buy back up to EUR1.5 billion in shares, or 10% of its outstanding capital stock (http://www.marketwatch.com/story/covestro-plans-15-billion-share-buyback-2017-10-24), depending on which value is reached first.
Commerzbank AG (CBK.XE) advanced 6% following reports the Frankfurt-based lender has hired financial advisers as it prepares for possible takeover bids. The bank has been working with Goldman Sachs and Rothschild to assess possible M&A tie-ups, the Financial Times reported (https://www.ft.com/content/087021f6-b805-11e7-8c12-5661783e5589?mhq5j=e5).
Data firm IHS Markit on Tuesday said its flash composite purchasing managers index for the eurozone fell to 55.9 in October, from 56.7 in September, to reach a two-month low. A reading above 50.0 signals an expansion in activity.
The decline in the measure (http://www.marketwatch.com/story/eurozone-economy-appears-to-slow-in-october-2017-10-24) was larger than expected, and was driven by services companies, which rely more heavily on domestic demand than their manufacturing counterparts.
"The eurozone PMI figures seen this morning point towards a stabilization in growth, with manufacturing gains making up for slowing services sector growth," said Joshua Mahony, market analyst at IG.
"However, taking today's figures in their entirety, it is clear that the manufacturing sector remains the reliable element of eurozone growth, with French, German and eurozone manufacturing all breaking market expectations," he said in a note.
Business activity in Germany, Europe's largest economy, rose in October, but at a slightly lower rate than in the previous month. Its preliminary composite PMI came in at 56.9, also a two-month low. September's reading was 57.7.
(END) Dow Jones Newswires
October 24, 2017 12:47 ET (16:47 GMT)