Europe: Shares fall as earnings deluge disappoints
EUROPEAN shares closed lower on Thursday as a slate of downbeat earnings reports in several sectors including tech and luxury weighed, while a global run for safe haven assets further exacerbated losses.
The pan-European Stoxx 600 index closed 0.7 per cent lower, though well off session lows, after hitting its lowest for over two months intraday.
Media shares declined 3 per cent, the most among major Stoxx 600 sectors, dragged by a 23.5 per cent slide in Universal Music Group after the world’s biggest music label reported lower-than-expected streaming and subscription revenue for the second quarter.
The tech sector lost 2.8 per cent, with Dutch chipmaking parts supplier BE Semiconductor Industries (Besi) tumbling 14 per cent after forecasting flat third-quarter sales, which fell below market expectations.
Paris-listed shares of STMicroelectronics dropped 13.7 per cent after the chipmaker cut its full-year revenue and margins guidance for a second time.
Other industry heavyweights such as ASMI and ASML dropped about 4 per cent each.
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An extended selling frenzy of tech shares in US further weighed on the sector.
Europe’s automobile shares lost 1.7 per cent, dragged by a 8.7 per cent tumble in Stellantis after the carmaker delivered worse-than-expected first-half results.
Adding to the drag, Renault retreated 7.5 per cent after alliance partner Nissan Motor slashed its full-year outlook after its first-quarter profit was almost completely wiped.
Nestle fell 5.1 per cent after the world’s biggest packaged food company lowered its sales outlook, while Kering lost 7.5 per cent after the French luxury group reported a bigger-than-expected drop in second-quarter sales and forecast a weak second half of the year.
A gauge of the 10 biggest European luxury firms fell about 1.7 per cent, touching a six-month low.
Amid the global sell-off, investors fled to less risky assets, including short-dated bonds, with the yield on the German two-year bond at its lowest level since February.
“On the surface, the intense political climate seems to have caused a notable shift in the marketplace, moving from prominent tech stocks to cyclical, defence, and small caps,” said Jeff O’Connor, head of market structure at Liquidnet.
On the bright side, UK’s blue-chip FTSE 100 was an outlier, gaining 0.4 per cent as index heavyweight Unilever gained 6.2 per cent after beating first-half profit estimates.
Swiss contract drug manufacturer Lonza gained 7.1 per cent after reporting a smaller-than-expected decline in first-half profit, while Sanofi jumped 4.2 per cent after the French drugmaker raised its full-year profit outlook.
On the data front, a survey of around 9,000 managers showed German business morale unexpectedly fell in July amid increasing pessimism about the performance of Europe’s largest economy. REUTERS
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