European stock markets showed limited enthusiasm on Monday after the benchmark index witnessed its most significant weekly gain since March. The real estate sector saw a dip in performance, while Ryanair achieved a one-month high following optimistic forecasts of a record annual profit.
As of 0923 GMT, the pan-European STOXX 600 index exhibited little change, having surged over 3% the previous week. Investors celebrated a string of robust earnings reports and indications of monetary policy tightening easing from major central banks.
Michael Hewson, Chief Market Analyst at CMC Markets, commented, “While the markets were revising their estimates for when U.S. rates might start to get cut, economic data in the UK and Europe pointed to an even deeper economic malaise.”
Recent data revealed that the downturn in euro zone business activity accelerated last month, signaling an increasing likelihood of a recession in the 20-country currency union.
Throughout the week, the market will be closely watching euro zone producer prices and retail sales data for September, especially considering the backdrop of diminishing price pressures.
The real estate sector experienced a decline of 1.1%, losing its position as the top-performing sector from the previous week.
In contrast, Ryanair saw a substantial increase of 6.8% as Europe’s largest airline by passenger numbers forecasted a record annual profit and committed to regular dividend payments, thereby lifting the travel and leisure sector index by 1%.
Telecom Italia (TIM) witnessed a 5% surge before turning negative. This came after the phone company’s board approved the sale of its fixed-line network to the U.S. private equity firm KKR, which sparked disagreement from its leading shareholder Vivendi.
Melrose Industries saw a 4% rise following the announcement that its unit, GKN Aerospace Engines, signed an agreement with GE Aerospace, expanding their long-term partnership.
Italy’s largest bank, Intesa Sanpaolo, advanced by 1.4% after raising its 2023 profit target and pledging to increase rewards for shareholders, contingent on avoiding a severe recession.
On the downside, Evotec experienced a 6.1% drop, landing at the bottom of the STOXX 600, following an RBC downgrade of the German biotech firm’s stock from “outperform” to “sector perform.”
PostNL saw an 11% decline after the Dutch postal company reported third-quarter results below expectations.
Investors will also closely monitor Italy’s credit rating review by Fitch Ratings scheduled for Friday.