European shares fall as mixed luxury company earnings weigh

EUROPEAN shares edged lower on Wednesday (Jul 29), as diverging results from French luxury groups weighed on the broader sector.

The pan-European Stoxx 600 index closed down 0.3 per cent at 645.01 points, snapping a three-session winning streak. The luxury sector gauge fell 2.4 per cent, leading sectoral losses.

Shares in Kering jumped nearly 17 per cent to the top of the Stoxx 600 index, and clocked their biggest one-day gain since 2002, after second-quarter sales at its flagship brand, Gucci, fell less than expected.

“We believe the strong marketing effort planned for late August could help boost fourth-quarter sales and return Gucci to positive growth,” HSBC Global Research analysts said in a note.

In contrast, Hermes shares tumbled 11 per cent, logging their steepest one-day slide since 2010, after the Birkin bag maker posted second-quarter sales growth in line with expectations but said it had yet to see a fundamental rebound in China, its biggest market.

Technology stocks dipped 0.4 per cent, for a third straight day, led by a 4.8 per cent drop in semiconductor equipment maker ASM International despite an upbeat forecast.

Microsoft and Meta will report after US markets close, with investors laser-focused on evidence of returns on their AI investments and whether the profits justify these companies’ lofty valuations.

Energy stocks rose 2.2 per cent, following a near 8 per cent jump in Brent crude to over US$90 a barrel, as major airstrikes resumed in the Middle East and dashed hopes for an imminent end to the US-Israeli war with Iran.

“The reporting season is driving markets, but has been overshadowed by developments in the Middle East. Then there is general market weakness as investors remain quite nervous about capex in data centres, particularly related to AI,” said Andrea Cicione, head of research at TS Lombard.

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Among other movers, French IT group Sopra Steria shares soared 13.6 per cent after the company raised its full-year revenue growth target. Glencore stock rose 2.8 per cent after its first-half copper production rose 15 per cent on higher grades at key operations.

Deutsche Bank gained 1 per cent after reporting a 10 per cent jump in second-quarter profit, defying expectations for a drop. Aberdeen shares fell 4.3 per cent after the British asset manager posted £3 billion (US$4 billion) in net outflows in the first half of the year, compared with expectations of £800 million in inflows. REUTERS