Introduction
Multiple factors kept European stocks under pressure the week starting July 17, 2024, led by the decline in commodity stocks. Many luxury brands, like Germany’s Hugo Boss and the UK’s Burberry, either cut down on full-year sales outlook or issued profit warnings on weak luxury demand, showcasing weak consumer sentiment.
However, what supported the market was dovish commentary from Fed Chair Jerome Powell, suggesting earlier-than-expected rate cuts and not waiting for inflation to get down to 2%, thus fueling speculation of multiple rate cuts.
The emerging political scenario in the US will also likely affect the European market in the coming days. European stocks are also being impacted by the waning Chinese economy. In Q2, the Chinese economy grew by 4.7% year-on-year, down from 5.3% in Q1. This slowdown is adversely affecting German companies that deal in luxury goods.
Eurozone industrial production fell by 2.9% year on year in May, following a 3.1% drop in April. Much of the attention is now focused on Eurozone inflation data, which will be released today (Wednesday), and the ECB press conference on Thursday.
Top Gainers and Losers in the European Stock Market
Top Gainers
The following are the top gainers in the last one week.
Stocks | Last 7 Days Gains (in %) |
Kongsberg Gruppen | 20.83 |
Ashtead Group | 6.88 |
ROCHE | 6.06 |
Segro Plc | 4.35 |
LIFCO AB | 5.46 |
Top Losers
The following are the top losers in the last one week across various sectors:
Stocks | Last 7 Days Loss (in %) |
Swatch Group | 8.31 |
Verallia | 7.86 |
KGHM | 5.51 |
Kering | 4.71 |
Galp Energia | 4.41 |
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The losers in the European market mainly belong to the Consumer Durables, Energy Minerals, Non-Energy Minerals, and Consumer Non-Durable segments. The Producer Manufacturing, Finance, and Health Technology segments showcase market strength.
Now that you know the top gainers and losers in the European stock markets, let’s see how the European indices fared during the week.
STOXX Europe 600
STOXX Europe 600, the largest stock index replicating almost 90% of the European stock market, is trading weak. With deteriorating investor sentiment and suggested recovery in the Euro economy looking bumpy, the index is likely to deal with a bearish note unless there is a monetary push by central banks.
STOXX 600 failed to break above 525 for the third time in a row, indicating that it has become highly resistant. The Relative Strength Index, a momentum indicator, is falling, indicating a loss of bullish momentum. The 510 and 500 levels below provide strong support for the index.
FTSE 100
Despite improving economic indicators, the FTSE 100 failed to maintain its positive momentum, giving up its gains in the previous week.
UK GDP increased by 0.4% in May, following zero growth in April. Increases in service and construction output fueled the increase. On a rolling three-month basis, the economy expanded by 0.9%, the fastest rate since 2022.
After failing to break above the resistive 8,290 level for the fourth time in a row, the index showcased weakness and fell toward its immediate support level of 8,140. A break below this level could trigger further weakness in the market and send it below the 8,000 level. The RSI index is also below 50, suggesting weak momentum in the market.
CAC 40
Political and economic uncertainty has put pressure on the stock market of the third-largest country in Europe. Experts suggest the country will not gain much economically from the Paris Olympics and is projected to grow by 0.3 percentage points this quarter due to the games.
CAC 40 has failed to break above the resistive 7,726 level this week and reversed its momentum, erasing the gains it made the previous week. Currently, there is strong support at the 7,480 level, and if it breaks below, we may see more weakness in the market.
DAX
Germany, Europe’s largest economy, has been severely impacted by weak consumer demand. It was the only G7 economy that contracted last year and is expected to grow slowly again this year. Declining exports, political uncertainty, and central banks’ unclear monetary policies have all contributed to lower consumer sentiment. The ZEW Economic Sentiment Index fell from 47.5 to 41.8 in July, missing expectations and capping an eight-month streak of increases.
DAX pulled back at the start of the week after trying to break above the 18,800 level but failed. It is moving towards one of its strong support levels at around 18,400. The overall momentum continues to be weak, and if it breaks below the 18,400 level, it may test for support at the 18,000 level.
Conclusion
Due to several factors, European stocks are expected to remain under pressure as we move forward. The emerging political landscape in the US, along with the impact of China’s slowing economy, will likely influence European markets in the coming days.
Key indices like the STOXX Europe 600, FTSE 100, CAC 40, and DAX exhibit bearish sentiment. The outlook for European stocks remains cautious, and strategic investment decisions will be crucial in navigating this challenging environment.
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
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I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.