Europe: Shares pause after record rally; earnings, US-China trade in focus
EUROPEAN shares retreated on Tuesday, after three consecutive sessions of record highs, as investors shifted their focus to corporate earnings from US-China trade developments.
The continent-wide Stoxx 600 index closed 0.22 per cent lower at 575.76 points, with most major regional indexes mirroring the move.
Spain’s blue-chip IBEX 35 eclipsed its 2007 threshold to set an all-time high, up 0.5 per cent. Growth in Spanish banks boosted the index, outpacing the broader European banking sector.
Finland’s benchmark index closed 1.8 per cent higher, at an over three-year high. Nokia jumped over 20 per cent to its highest level since 2016, after AI bellwether Nvidia said it planned to invest US$1 billion in the telecom equipment provider.
The broader telecom index outperformed peers with a 2.2 per cent rise.
Conversely, heavyweight healthcare shares fell 1.7 per cent, with Swiss drugmaker Novartis down 4.2 per cent despite meeting third-quarter profit forecasts.
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The European construction and materials sector fell 0.8 per cent, dragged down by a 5.9 per cent loss at chemicals firm Sika after a rating downgrade.
Banks added 0.8 per cent. HSBC rose 4.6 per cent after boosting its income outlook and vowing to shift into growth mode with its Hang Seng Bank takeover. London’s FTSE 100 topped 9,700 points for the first time.
Limiting gains was BNP Paribas, down 3.5 per cent after the French bank missed third-quarter profit forecasts.
European stocks have had a recent rally to record highs, boosted by optimism over a potential US-China trade deal ahead of a planned meeting between US President Donald Trump and his Chinese counterpart in South Korea on Thursday.
A trade deal would halt heavier US tariffs and Chinese rare earth export controls, helping allay some recent worries about tensions between the two economic powers.
“Market participants are very much now in the mindset that trade and Sino-US relations are kind of solved and on a much better footing at least temporarily,” Michael Brown, senior research strategist at Pepperstone, said.
Major central bank policy announcements will be watched this week. The US Federal Reserve is expected to cut interest rates by 25 basis points on Wednesday, while the European Central Bank is likely to hold rates on Thursday.
“The Fed faces the harder test: managing expectations for what comes next, and amid a dearth of data... Markets are already pre-committing to an easing cycle front-loaded between October and December, but Powell will likely stress optionality this week,” said Laura Cooper, senior macro strategist at Nuveen.
Capgemini gained 1.5 per cent after the French IT consulting firm raised its growth forecast, while wind turbine maker Nordex soared nearly 23 per cent after hiking its full-year earnings outlook.
On the data front, an ECB survey showed euro zone consumers lowered one-year inflation expectations and kept longer-term views unchanged. REUTERS
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