Markets

European Markets Close Slightly Higher as Investors React to Earnings; Adidas Down 5%

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  • Earnings continued guiding sentiment in Europe, with Siemens, Adidas, Merck, Bayer, Intesa Sanpaolo and WPP among the big names reporting Wednesday.
  • The Bank of England announced its monetary policy decision Thursday, upholding its massive stimulus but raising inflation forecasts.

LONDON — European markets closed slightly higher on Thursday as investors digested corporate earnings and a key monetary policy decision from the Bank of England

The pan-European Stoxx 600 provisionally ended 0.4% higher, with travel and leisure stocks adding 1.3% while mining stocks dropped 2.6%.

Shares in Asia-Pacific were mixed on Thursday amid uncertainty over Chinese policy and the rapid growth in Covid-19 infections in the region.

Stateside, the major U.S. equity indexes rose as Wall Street looked to improve upon a mixed week.

Back in Europe, the Bank of England left its monetary policy unchanged on Thursday but warned of more pronounced inflation in the near term.

Policymakers voted unanimously to keep the Bank's main lending rate at a historic low of 0.1%, where it has been since March 2020, and split the vote 7-1 in favor of maintaining the quantitative easing program at £895 billion ($1.25 trillion).

The central bank also raised its inflation forecasts, which was expected by economists.

On the data front, final PMI (purchasing managers' index) readings on Wednesday showed euro zone business activity surging in July to its fastest expansion in 15 years.

Earnings in focus

Earnings continued guiding sentiment in Europe, with Siemens, Adidas, Merck, Bayer, Intesa Sanpaolo and WPP among the big names reporting Wednesday.

Adidas upped its outlook for the year, despite a drop in sales in China as some consumers boycotted the German sportwear brand for its stance against alleged human rights abuses. Shares fell 5.6%.

Pharmaceutical giant Merck KGaA saw its second-quarter profits beat expectations, on the back of increased demand for lab equipment and supplies for developing Covid-19 treatments and vaccines. Merck shares gained 6.7%.

French lender Credit Agricole's profit for the period also doubled, reaching 1.97 billion euros ($2.33 billion) from 954 million euros this time last year. The rise is credited to government support schemes for the economy and lowered pandemic-related charges for bad loans. Credit Agricole shares slipped 0.2% lower.

Diagnostics group Eurofins saw its shares climb 10.7% to lead the Stoxx 600 after reporting record first-half earnings and raising its full-year outlook.

At the bottom of the European blue chip index, German biotech giant Bayer fell 7.3% after missing second-quarter forecasts on the back of higher production costs and currency effects.

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