European shares hit three-week low as earnings, data and Iran conflict weigh

[BENGALURU] European shares slid to a three-week low on Wednesday (Apr 29) amid mixed corporate results and data pointing to the economic damage caused by the Iran war, with investors cautious ahead of key global monetary policy decisions.

The pan-European Stoxx 600 closed down 0.6 per cent at 602.96 points.

GSK and AstraZeneca fell 5.4 per cent and 1.5 per cent, respectively despite posting strong first-quarter earnings. Their declines dragged the healthcare index down 1.7 per cent, making it the biggest drag on the Stoxx 600.

“European companies are reporting okay numbers and some of them are ahead of expectations, but the market is not really rewarding them for that (due to the) underlying macro headwinds,” said Marija Veitmane, head of equity research at State Street.

European equities are nearly 5 per cent below pre-war levels, lagging US peers and global markets, as the region’s reliance on energy imports has intensified inflation pressures and weighed on sentiment.

Data on Wednesday showed German inflation rose in April due to surging energy prices, while eurozone economic sentiment fell to a three-and-a-half-year low this month amid the Iran war.

US President Donald Trump said that he was unhappy with Teheran’s latest proposal to end the conflict, adding uncertainty over prospects for negotiations.

Most major regional bourses also fell. Germany’s DAX closed lower for an eighth straight session, its longest losing streak since 2020.

Wall Street slipped ahead of earnings from several US Big Tech firms and a Federal Reserve policy decision, as investors looked for signs that heavy AI spending is translating into earnings growth.

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European shares hit near three-week low on Middle East impasse, mixed earnings

ECB, earnings deluge

Focus now turns to the European Central Bank’s (ECB) meeting on Thursday, where policymakers are widely expected to keep rates on hold. Markets will scrutinise guidance as officials seek to curb inflation while managing weak growth.

“The US has continued to show remarkable resilience .... Europe, on the other hand, has been showing weaker growth dynamics,” said Daniela Hathorn, senior market analyst at Capital.com.

Investors sifted through a wave of earnings to assess the war’s impact on corporate Europe.

UBS gained 3.2 per cent after the Swiss bank posted better-than-expected first-quarter net profit, while Deutsche Bank fell 1.8 per cent after its results. The eurozone banks index slipped 0.3 per cent.

Adidas jumped 8.4 per cent after the German sportswear group reported better-than-expected first-quarter operating profit.

Elsewhere, Pernod Ricard fell 3.1 per cent after the French spirits maker ended merger talks with Jack Daniel’s owner Brown-Forman.

Finnish lift maker Kone slipped 3.3 per cent after agreeing to buy German rival TK Elevator in a 29.4-billion-euro (S$44 billion) deal. Thyssenkrupp, which owns a 16.2 per cent stake in TK Elevator, surged nearly 10 per cent. REUTERS