Europe close: Markets claw back losses to finish higher
By Josh White
Date: Wednesday 05 Nov 2025
(Sharecast News) - European equities edged higher on Wednesday, recovering modestly from recent losses as stronger economic data from the eurozone and the UK offset lingering concerns over stretched valuations in artificial intelligence stocks and a record-breaking US government shutdown.
The pan-European Stoxx 600 rose 0.23% to 571.90, while Germany's DAX added 0.42% to 24,049.74 and France's CAC 40 gained 0.08% to 8,074.23.
London's FTSE 100 outperformed, advancing 0.64% to 9,777.08.
"Market jitters around US tech stocks might have put investors on the edge of their seats, but yesterday's sell-off wasn't severe enough to cause widespread panic," said Russ Mould, investment director at AJ Bell.
"A 2% decline in the Nasdaq index and a 10.7% jump in the Vix fear gauge were like a sharp bout of turbulence on a flight - unpleasant, but just for a moment.
"The fact a major sell-off didn't occur across the whole of Asian and European markets following Wall Street's wobble implies that we're not at the start of the correction many people have feared."
Investor sentiment remained fragile following renewed pressure on global technology names, while political dysfunction in Washington added to unease.
The US government shutdown entered its longest stretch on record, leaving nearly 1.5 million federal employees either furloughed or working without pay.
In London, trading was supported by gains in energy shares and solid UK economic data.
"The UK's FTSE 100 edged higher on Wednesday, recovering from early losses in heavyweight banking stocks as gains in energy shares provided support," said Patrick Munnelly, market strategy partner at TickMill.
"Oil and gas stocks rose by 0.3%, buoyed by steady crude oil prices.
"However, banking giants like Standard Chartered and Barclays slipped around 1% each, curbing overall market progress.
"Precious metal miners were among the hardest hit, tumbling 2%, while the personal goods sector shone with a 1.6% rise."
Euro area economy expands faster in October
Economic data provided some reassurance - the eurozone economy expanded in October at its fastest pace since May 2023, with the HCOB composite PMI rising to 52.5 from 51.2 in September.
Hamburg Commercial Bank's chief economist Cyrus de la Rubia said the figures finally offered "something positive to report" for the bloc, led by strong services activity in Germany, where the index jumped more than three points to 54.6.
He noted, however, that sustaining the momentum would depend on political stability in France and the success of Berlin's fiscal stimulus efforts.
Germany's industrial data also pointed to tentative improvement.
Factory orders climbed 1.1% month-on-month in September, the first increase since April and slightly above expectations.
Gains were driven by demand for electrical equipment, transport vehicles and automobiles, while metal products saw a sharp drop following large August orders.
In the UK, services activity strengthened more than anticipated, with the S&P Global PMI rising to 52.3 in October from 50.8 the previous month.
"Britain's services sector showed signs of improvement last month, with output and new orders on the rise," added Munnelly.
"A survey revealed that business activity expectations for the next year reached their highest level since October 2024."
Tim Moore of S&P Global said the survey signalled "positive signals" for the sector, highlighting a rebound in new business and the strongest expectations for the year ahead since October 2024.
Matt Swannell at the EY Item Club added that cost pressures were easing "a little" following April's rise in employer national insurance contributions, though inflation in labour-intensive services was likely to remain sticky.
Looking ahead, investors were focused on Thursday's Bank of England policy decision.
"Expectations suggest the Bank of England will hold interest rates steady on Thursday," said Munnelly.
"Yet, softer inflation and wage data could strengthen the case for a potential rate cut in the future."
Across the Atlantic, data showed mixed signals.
US private payrolls increased by 42,000 in October, beating forecasts, while the ISM services PMI jumped to 52.4 - the fastest pace of growth in eight months - as business activity and new orders improved.
However, hiring remained subdued and inflationary pressures persisted, with prices paid climbing to a three-year high.
Mould said investors remain caught between optimism and caution.
"Big money has been made on financial markets this year, and there is the potential for some people to decide enough is enough and to lock in profits.
"Equally, there are also many people who believe there is good reason to stay fully invested as there are tailwinds to take markets even higher.
"There's the potential for more big swings on the market over the coming weeks and months."
Elsewhere, China's services PMI eased to 52.6 from 52.9 in September, its slowest rate of growth in three months, as weaker export demand offset a solid domestic recovery.
RatingDog founder Yao Yu said profit margins remained under pressure despite improving efficiency and resilient local consumption.
Vestas soars on strong results, Novo Nordisk closes weaker
In corporate news, Danish turbine maker Vestas Wind Systems soared 14.77% after posting strong results, while medical device group Ambu plunged 15.8% on weaker-than-expected earnings hit by tariffs.
Novo Nordisk fell 4.49% after reporting quarterly profits broadly in line with expectations, and chipmakers BE Semiconductor and ASM International slipped 0.74% and 1.71%, respectively, amid the broader tech pullback.
Orsted ended flat after reporting a DKK 1.7bn third-quarter loss, narrower than forecasts, while BMW gained 6.85% as third-quarter earnings of €2.3bn matched estimates.
Marks & Spencer shares, meanwhile, "experienced a rollercoaster session, sliding 2.5% to 374.7p and ranking among the biggest decliners in the FTSE 100 index," noted Munnelly.
"The company reported a 55% year-on-year drop in adjusted pre-tax profit for the first half, largely due to a one-off cyber incident."
Reporting by Josh White for Sharecast.com.
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