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Spanish stocks outshine European peers as Inditex jumps


By Shreyashi Sanyal

(Reuters) -Madrid stocks rose on Wednesday after Zara-owner Inditex’s strong quarterly showing, while its other European peers lagged as luxury companies dipped on weak China trade data.

The pan-European STOXX 600 index edged 0.2% lower, while Spain’s IBEX 35 index gained 0.3%, in the first hour of trading.

Inditex rose 5.6% after it said sales of its spring-summer collection jumped by 16% over the past month.

The European retail index jumped 2.2%, touching its highest level in nearly three weeks and leading sectoral gains.

China’s exports shrank much faster than expected in May, while imports extended declines with a grim outlook for global demand, especially from developed markets.

China-exposed luxury giant and Europe’s most valuable firm LVMH fell 0.3%.

The STOXX 600 has been range-bound this week as worries remained of further interest rate hikes by major central banks, including the European Central Bank and U.S. Federal Reserve next week, in the face of slowing economic growth.

“Markets are very tentative at the moment,” said Giles Coghlan, chief market analyst at HYCM in London.

“We’ve had more negative news from China overnight, uncertainty regarding whether tech stocks can keep up the recent rally and a little bit of a summer malaise are all leading to sort of pretty much directionless trade.”

Chip stock BE Semi, which rallied lately on optimism over the booming adoption of AI-related semiconductor technology, slumped 4.5% on the day.

The broader tech index dipped 0.3%, after clocking its best monthly performance in four months in May.

Markets currently expect the Fed to skip a rate increase in its June meeting, while expectations for further hikes by the ECB remain.

ECB board member Isabel Schnabel said in a newspaper interview that the central bank’s rate hikes could take longer than usual to pass through to the real economy and their impact may be more muted than usual.

Danske Bank gained 5.4%, as Denmark’s largest lender raised its long-term earnings target and said it plans to divest its Norwegian retail business.

Speciality chemicals group Croda International lost 2.2%, weighing down the European chemicals index by 0.6% after Goldman Sachs cut its rating on the stock to “neutral” from “buy”.

The STOXX 600 index started the month with gains of 2%, with Spanish stocks leading so far as the IBEX added over 3%.

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Sonia Cheema and Eileen Soreng)

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