European Stocks Recovered Thanks to SAP and LVMH

On Wednesday, European stocks redeemed early losses as upbeat earnings forecast from German software group SAP and robust quarterly sales for French luxury goods maker LVMH helped to alleviate worries about inflation.

By 08:24 GMT, the pan-European STOXX 600 index was up 0.2% after declining as much as 0.4% in opening trade. The U.K.’s FTSE dropped 0.4%, the German DAX added 0.6% and France’s CAC 40 was flat. 

S&P gained 4.5% after the German software group raised its full-year outlook for the third time. SAP raised its full-year outlook following a strong quarterly showing as more customers shift their IT operations to the cloud.

French luxury goods maker LVMH added 1.5% as sales at its fashion and leather goods division rose strongly in the third quarter. However, overall revenue growth in Asia, as well as the U.S., eased after a stellar first-half performance. 

The world’s second-largest economy’s export growth unexpectedly accelerated in September. The data regarding China’s economy helped to improve market sentiment. 

Worries about central banks exiting their pandemic-era stimulus and a global energy crunch, and signs of elevated prices affected the outlook for economic recovery, keeping it nearly flat on the month, after falling dropped 3.4% in September. 

On Tuesday, the International Monetary Fund (IMF) changed its 2021 global growth forecast to 5.9% from 6.0%. The IMF left a 2022% forecast unchanged at 4.9%. 

U.S. stocks on Tuesday 

U.S. stocks declined on Tuesday ahead of a key inflation reading and a kick-off to third-quarter earnings season. The Dow Jones Industrial Average fell 117.72 points or 0.3% to 34,378.34. The S&P 500 dropped 0.2% to 4,350.65. The Nasdaq Composite fell 0.1% to 14,465.92.

The consumer price index (CPI) for September is expected to be announced in several hours. Economists expect prices for an array of consumer goods to increase 0.3% in September from the previous month and 5.3% year over year. 

The Federal Open Market Committee (FOMC) on Wednesday is also set to release its minutes from the September meeting. Investors and analysts will be analyzing the minutes for any potential clues regarding the central bank’s plans.

Lastly, this week, major companies will report their quarterly financial results. Investors are waiting for the results of Morgan Stanley, Bank of America, Wells Fargo, Walgreens Boots Alliance, Citigroup.