European stocks edge higher; German factory orders impress

© Reuters

By Peter Nurse 

Investing.com - European stock markets largely edged higher Wednesday, helped by the release of healthy German industrial orders, but risk sentiment remained fragile.

At 03:35 ET (07:35 GMT), the DAX index in Germany traded flat, while the CAC 40 in France climbed 0.1%, and the FTSE 100 in the U.K. rose 0.2%.

Trading ranges are expected to be tight in Europe as a long weekend approaches, but sentiment received a boost after the release early Wednesday of data showing German industrial orders soared 4.8% in February.

Additionally, French industrial production rose 1.2% on the month in February, ahead of the 0.5% growth expected, and a significant improvement from the revised drop of 1.4% the prior month.

These numbers offer hope for the region’s beleaguered manufacturing sector, which has been faring less favorably than services throughout Europe.

That said, risk sentiment remains fragile with investors wary about the possibility of recessions on both sides of the Atlantic.

Over in the U.S., Tuesday's JOLTS report showed that job openings dropped to their lowest level in nearly two years in February. This followed data showing that the U.S. manufacturing sector sank deeper into contraction in March.

Back in Europe, Monday’s manufacturing activity data showed that factories struggled across the euro zone last month with consumers feeling the pinch from rising living costs.

And while there is some debate over whether the Federal Reserve will pause its rate-hiking cycle next month, the European Central Bank could still increase interest rates by a hefty 50 basis points in May as it battles rising underlying inflation.

The main focus Wednesday will be the release of the final Eurozone purchasing managers’ index data for the services sector in March, which is expected to show continued expansion.

In the corporate sector, Sodexo (EPA:EXHO) stock soared almost 9% after the French catering and food services group announced plans to spin off and list its Benefits & Rewards Services business during 2024.

Barry Callebaut (SIX:BARN) stock fell 2% after the world's biggest chocolate maker appointed Peter Feld as its new chief executive after reporting a decline in first-half sales volumes.

H & M Hennes & Mauritz (ST:HMb) stock rose 0.8% after Morgan Stanley upgraded its investment stance on the fast fashion giant to ‘equal-weight’ from ‘underweight’, citing margin improvements that helped offset weaker top-line growth.

Direct Line (LON:DLGD) stock climbed 4.5% after Citigroup upgraded the U.K. insurer all the way to ‘overweight’ from ‘underweight’, arguing that the sharp selloff that followed its profit warning in January had gone too far.

Oil prices rose Wednesday, with industry data showing a fall in U.S. crude inventories helping extend a rally prompted by the weekend’s unexpected OPEC+ output cut.

U.S. crude oil inventories fell by around 4.3 million barrels in the week ended March 31, according to data from the American Petroleum Institute, suggesting some improvement in demand.

The U.S. Energy Information Administration will release its official weekly report later in the session.

By 03:35 ET, U.S. crude futures traded 0.2% higher at $80.84 a barrel, while the Brent contract climbed 0.3% to $85.19. 

Additionally, gold futures rose 0.2% to $2,042.25/oz, while EUR/USD traded 0.1% higher at 1.0960.