Europe close: Stocks finish higher after positive start on Wall Street

(Sharecast News) - European stocks rose on Wednesday as a fairly muted reaction to the UK government's Autumn Budget was offset by Thanksgiving-fuelled positive start on Wall Street. The Stoxx 600 index closed up 0.3% on the day, with gains across Frankfurt, Paris and Madrid offset by a flat finish in Milan and a 0.2% drop in London.

Sentiment was mostly helped by gains on Wall Street after the opening bell ahead of the Thanksgiving holiday on Thursday.

"Historically, US stocks tend to do well in the run-up to Thanksgiving, and this upward bias continues to exhibit itself despite the huge gains made over the past month," said analyst Chris Beauchamp from IG.

The minutes from the latest Federal Open Market Committee meeting, released last night, were still in focus after the central bank discussed leaving policy "at a restrictive stance for some time" until inflation moves down sustainably to the 2% target.

"While the Fed minutes did not deliver any reasons to hope for early rate cuts, investors can be thankful that no more rate hikes appear likely," Beauchamp said.

In the UK, the Chancellor has announced a raft of measures intended to boost business investment and grow the economy, including cutting business taxes and National Insurance, as well as lifting the national living wage. Delivering his Autumn Statement, Jeremy Hunt introduced a raft a measures - 110 in total - which he said would also unlock supply side reforms and boost business investment by £20bn a year.

However, the potential impact that lower taxes and higher living wages could have on inflation has raised some concerns.

"The near-term loosening of fiscal policy and the announcement that the national living wage will rise by almost 10% in April 2024 are likely to strengthen the Bank of England's resolve to keep Bank Rate at its current level for a prolonged period," said Andrew Goodwin, chief UK economist at Oxford Economics, adding: "We think markets are overestimating the degree of monetary loosening that will happen in 2024."

In other news, oil prices tumbled on Wednesday after OPEC+ delayed a meeting by a week to 30 November with rumours that member countries were not aligned on current production. According to Bloomberg, Saudi Arabia has expressed "dissatisfaction" with output levels of other members. Brent crude was down 3.8% at $79.34 a barrel.

Thyssenkrupp and Sage jump

Shares in Thyssenkrupp surged 8% in Frankfurt despite the German engineering giant taking a huge €2.1bn write-down on the value of its steel division. The company reported a net loss of €2.0bn in its fiscal year ending 30 September, compared to a net profit of €1.2bn the year before. But investors were pleased after the company booked its first ever positive annual free cash flow before mergers and acquisitions.

Sage Group was a high riser in London, jumping 13% after the enterprise software group reported full-year underlying recurring revenue growth of 12% and proposed a final dividend increase of 5% and a share buyback programme of up to £350m.

Heading the other way was home improvement retail conglomerate Kingfisher which cut its profit guidance for the second time in two months owing to continued market weakness in France, causing shares to drop 7%. The company now expected adjusted full-year pre-tax profit to come in at around £560m, compared with £758m the year before.

Swiss luxury giant Richemont was performing well after JP Morgan named the company as "the only name we would still chase" in the European luxury goods sector "which stands, in our view, as one of the quality names in the space and at one of the most attract

Oil stocks fell across the continent while travel stocks gained as the price of oil tanked once again. BP, Repsol and TotalEnergies finished firmly in the red, while TUI Travel, IAG, Air-France-KLM and Deutsche Lufthansa were flying higher.