Europe close: Stocks rise as investors digest PMI data

(Sharecast News) - European markets closed above the waterline on Tuesday, propelled by positive survey data from the eurozone that bolstered investor sentiment.

The pan-European Stoxx 600 rose 1.11% to reach 507.89, as the DAX in Germany gained 1.58% to 18,142.58, while France's CAC 40 increased 0.87% to settle at 8,110.41.

In London, the FTSE 100 managed a modest uptick of 0.26%, reaching 8,044.81.

London's top-flight index reached a fresh record high during trading hours, beating its previous best-ever level set just a day earlier.

In currency markets, the euro was last down 0.29% on sterling, trading at 86.01p while strengthening 0.38% against the dollar to change hands at $1.0696.

"After yesterday's strong session the FTSE 100 might have been forgiven for running into some early selling," said IG chief market analyst Chris Beauchamp.

"But the index was able to hit a new peak before succumbing to some profit-taking in the afternoon session, though it remains up on the day overall.

"Bank of England chief economist Huw Pill will take the blame for the weakness this afternoon, as he warned investors not to hope for rate cuts too soon, but the medium-term outlook for UK stocks continues to look brighter."

Beauchamp added that US stocks were continuing to put last week's low behind them, making further headway, with the Nasdaq 100 leading the way in percentage terms ahead of Tesla's release later in the evening.

"The recent weakness in stocks seems to have cleared some of the froth off the market, trimming sentiment just in time for the all-important round of earnings from Big Tech."

Eurozone economic activity grows in April, US shows signs of slowing

In economic news, activity in the eurozone showed robust growth in April, reaching its highest level in nearly a year, according to fresh preliminary data.

The HCOB flash composite purchasing managers' index (PMI) surpassed expectations, rising to 51.4 from 50.3 in March, marking an 11-month high.

Both the services PMI, which increased to 52.9 from 51.5, and the manufacturing output PMI, which ticked up to 47.3 from 47.1, contributed to this positive trend.

"The eurozone got off to a good start in the second quarter; the composite HCOB flash PMI took a significant step into expansionary territory," said Dr Cyrus de la Rubia, Hamburg Commercial Bank chief economist.

"This was propelled by the services sector, where activity has gathered further steam.

"Considering various factors including the HCOB PMIs, our GDP forecast suggests a 0.3% expansion in the second quarter, matching the growth rate seen in the first quarter, both measured against the preceding quarter."

In Germany, the private sector also exceeded forecasts, experiencing a surprise return to growth.

The HCOB German fash composite PMI rose above the critical 50 mark for the first time in 10 months, reaching 50.5 compared to 47.7 in March.

"Although manufacturing remained in contraction, the rate of decline in factory production eased and confidence amongst goods producers towards the outlook reached the highest for a year," HCOB said.

"On the price front, rates of both input cost and output price inflation ticked up, but they nevertheless registered broadly in line with their respective long-run averages."

Meanwhile, Britain's private sector continued its expansion in April, marking the sixth consecutive month of growth.

The S&P Global flash UK PMI composite output index rose to 54.0, its highest level since May 2023.

That growth was primarily driven by a surge in service sector output, although manufacturing production saw a slight decline due to weak market conditions and reduced demand.

Notably, new order volumes across the private sector experienced a significant uptick, with the rate of growth being the strongest since May last year.

"Early PMI survey data for April indicate that the UK economy's recovery from recession last year continued to gain momentum," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"Improved growth in the service sector offset a renewed downturn in manufacturing to propel overall business growth to the fastest for nearly a year, indicating that GDP is rising at a quarterly rate of 0.4% after a 0.3% gain in the first quarter.

"The upturn encouraged firms to take on workers in increased numbers which, alongside April's rise in the National Living Wage, drove cost pressures sharply higher."

However, economic activity across the Atlantic in the United States showed signs of slowing last month, according to two closely followed surveys.

S&P Global's flash services sector PMI slipped from 51.7 in March to 50.9 in April, while the factory sector PMI fell from 54.0 to 51.1.

The reports also indicated a pace of payroll cuts not seen since the global financial crisis, excluding the pandemic lockdown period.

Retailers in focus, miners close in the red

In equity markets, retailers were in focus, with Associated British Foods seeing a substantial increase of 8.98% after the Primark owner lifted its annual guidance.

JD Sports Fashion jumped 3.76% after announcing its acquisition of US chain Hibbett for $1.08bn.

Swiss drugmaker Novartis gained 1.81% after raising its full-year guidance on the back of better-than-expected first-quarter results.

Renault, despite initial losses, reversed that trend to close 0.4% firmer after reporting a 1.8% increase in first-quarter revenue, primarily fueled by strong performance in its financing business.

Swedish financial services provider Nordnet jumped 9.01% after releasing its interim results.

On the downside, mining plays were in the red, with Anglo American, Antofagasta, Glencore and Rio Tinto all seeing decreases in their stock prices.

Reporting by Josh White for Sharecast.com.