DAX Price Forecast: European Stocks End the Month Higher, Led by Strong Earnings

Highlights

• European stock markets close higher on positive economic data and earnings
• Defensive sectors outperform major sectors, while tech and miners decline
• Euro-zone economy remains flat in Q1 2023

Overview

The European stock markets experienced a late-day turnaround on Friday, closing higher after the release of positive economic data and corporate earnings.

The main STOXX 600 index gained 0.6%, driven by strong earnings following a volatile month in March.

Germany’s DAX settled at 15922.38, up 121.93 or +0.77% and France’s CAC 40 ended at 7491.50, up 7.66 or +0.10%.

The UK’s FTSE 100 finished at 7870.57, up 38.99 or +0.50%, and  Despite the earlier dip, London’s FTSE 100 gained 3% in April, outpacing all major European peers.

Sector Performances Mixed in April

Oil and gas led gains, rising by 1.9%, while banks fell by 1.4% on Friday.

Defensive sectors, such as real estate and healthcare, outperformed major European sectors for the month, rising by 5.2% and 4.7%, respectively.

In contrast, tech and miners were the top two monthly decliners, down 4.7% and 5.6%.

NatWest Revenue Up, Stock Falls

The banking sector experienced volatility, with U.S. regional bank First Republic seeking a recovery strategy after losing around 40% of its deposits in the first quarter.

British bank NatWest reported a 37.2% annual increase in income to £1.036 billion ($1.29 billion), but its stock price fell as much as 3.7% after reporting a 20 billion pound fall in deposits in the first quarter.

Positive Q1 Results for Mercedes-Benz

Mercedes-Benz Group AG and Electrolux AB both reported positive first-quarter results, with Mercedes-Benz beating forecasts and raising its sales outlook for vans. Electrolux AB jumped 15.5% after posting first-quarter sales and operating loss above market expectations.

German chemicals maker Covestro also saw an 8.5% rise on an upbeat 2023 core earnings forecast and the resumption of a share buyback program. Swedish forestry company SCA gained 7.0% after posting a smaller-than-expected fall in first-quarter core earnings.

Euro-Zone Growth Marginal, Below Expectations

Preliminary data released on Friday showed that the euro zone grew only marginally in the first quarter of 2023. The rate was lower than market expectations, even as Germany’s GDP flatlined over the period.  The data confirmed that the euro-zone economy was broadly stagnant in Q4 and Q1.

ECB Anticipates Raising Rates

Next week’s April inflation data is expected to show that the core rate remained around its record high of 5.7%. This is likely to encourage the ECB to raise rates by 50bp on Thursday.

For a look at all of today’s economic events, check out our economic calendar.