Europe midday: Stocks slip into the red on mixed economic data

(Sharecast News) - European stocks slipped into the red by Monday lunchtime, as caution started to set in following five straight days of gains. The Europe Stoxx 600 index was down 0.15% by midday CET, though losses across the continent were only mild with sentiment still hoped by rising optimism that various central banks may have reached the peak of their rate-hiking cycle.

The Stoxx 600 jumped 3.1% last week after both the Federal Reserve and Bank of England kept interest rates unchanged, while the European Central Bank has already indicated that a further hike in rates is unlikely.

"European markets have kicked off the week on a hesitant tone, with traders left wondering whether last week's dramatic surge represents an opportunity to sell or a sign that the bulls are back at the helm," said analyst Joshua Mahony from Scope Markets.

Economic data comes in mixed

Investors were having to digest a barrage of purchasing managers' indices (PMIs) during the morning session.

The final estimate for October's HCOB service-sector PMIs showed downward revisions in France and upwards revisions in Germany, resulting in a headline reading of 47.8 for the wider Eurozone service sector - in line from the 'flash' estimate. As a result, the Eurozone composite PMI was unchanged at 46.5 - though still firmly in negative territory.

"Overall, the PMIs continue to signal downside risks to Eurozone GDP growth, warning that services activity is now faltering, alongside a so-far sustained slowdown in manufacturing," said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics. "A slowdown in services output was the key driver of the further softening in EZ private sector activity at the start of Q4, amid an unchanged pace of contraction in industry, adding to the evidence that the slowdown in the economy is now becoming more broad-based."

In the UK, the S&P Global/CIPS construction PMI ticked up to 45.6 from 45.0 in September, but below consensus expectations of 46.0 and the second-lowest reading since May 2020.

Germany factory orders unexpectedly rose 0.2% in September, surprising analysts who had pencilled in a 1% decline. However, a substantial downward revisions to August's increase, from 3.9% to just 1.9%, painted a bleak outlook for manufacturing in the fourth quarter.

Meanwhile, the Sentix Eurozone investor sentiment index improved to -18.9 in November, from -21.9 in October - showing that the mood is still subdued but better than the consensus forecast of -22.9.

Ryanair lifts airline stocks

Ryanair was performing well on the news it will pay its first ever dividend, as it posted a jump in first-half profit thanks to record summer traffic and higher fares. In the six months to the end of September, profit after tax rose 59% to €2.18bn, with revenues 30% higher at €8.58bn. Shares were up around 7% by midday.

Sector peers IAG, Easyjet, Deutsche Lufthansa and Air France-KLM were also flying higher.

Telecom Italia was lower after agreeing to offload its landline business to US private equity group KKR for €22bn.

Aerospace group Melrose gained on the announcement that it has signed a new $5bn aftermarket services agreement with engines giant GE Aerospace.

Insurance company Prudential fell after new business sales and profit growth slowed slightly in the third quarter.