European Stocks Slight Gain Despite Worst Quarter in a Year

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European Stocks Face Worst Quarter in a Year

Despite a minor upswing on Friday due to a dip in Eurozone inflation, European shares concluded their worst quarter in a year. The pan-European STOXX 600 index saw a 0.4% rise on Friday but ended the quarter with a 2.5% decrease. Eurozone inflation hit its lowest point in two years in September, suggesting that the European Central Bank’s consistent interest rate hikes were somewhat successful in controlling inflation. However, this came at a cost to economic growth, raising discussions about potential rate cuts. Germany’s 10-year government bond yield, a crucial benchmark for the euro area, decreased by 15 bps to 2.818%.

Sector-wise Performance

Rate-sensitive real estate shares saw the most significant rise in over ten weeks, surging by 2.7%. Technology shares also rose by 1.1% after softer-than-expected inflation data. However, tech stocks have experienced a decline of over 10% this quarter due to concerns about prolonged higher interest rates. Conversely, oil and gas shares experienced a dip of 1.3% due to falling oil prices and macroeconomic worries.

Individual Stock Performance

Among individual stocks, Commerzbank was the top gainer on the STOXX 600, soaring by 11.1% after announcing a revamp in its payout policy for investors, aiming for a minimum 70% profit return by 2024. Adidas climbed 6.2% following strong profit estimates from U.S. peer Nike. Luxury stocks such as LVMH and Richemont also saw gains of 1.5% and 1.9% respectively.

UK’s Strong Economic Performance

On a positive note, the UK’s FTSE 100 experienced a 0.1% climb and was up by 1.0% for the quarter, outperforming European peers. Recent data revisions indicate that Britain’s economic performance since the start of the COVID-19 pandemic has been stronger than previously believed, surpassing growth rates in Germany and France.

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