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Europe: Shares break six-day winning streak, focus moves to Federal Reserve
[BENGALURU] European shares closed lower for the first time in seven sessions on Tuesday, as weak earnings dampened optimism surrounding the US-China trade progress and ahead of an expected interest-rate cut by the US Federal Reserve later this week.
The pan-European Stoxx 600 fell 0.2 per cent after scaling a 21-month high in the previous session, tracking record gains for Wall Street's S&P 500 index.
"The markets are at new highs in Europe and in the US and that is also something that could be pushing investors to take some profit," said Roland Kaloyan, head of European equity strategy at Société Générale.
Finnish paper firm Stora Enso's slumped 5.1 per cent as its quarterly profit dropped and it warned of global political uncertainties.
Peers Mondi and Smurfit Kappa also fell following the results.
Telecom stocks lost 1.7 per cent, the most among the major European sub-sectors, hurt by a 2.6 per cent slide in shares of Orange.
A top executive at France's number one telecoms operator said sales in Spain, the telecoms group's second-biggest market, would remain under pressure from competitors cutting prices in coming months.
The oil and gas sector fell 0.9 per cent, dragged down by British energy firm BP, which reported a sharp drop in third-quarter profits, hurt by weaker oil prices and lower production.
Also weighing on the sector was British oilfield services firm Hunting, down 1 per cent, after the company said it sees annual core profit at the lower end of market expectations as it grapples with a slowdown in the US onshore drilling market.
Financials were pulled lower by a 2.4 per cent drop in Deutsche Boerse after the German exchange operator missed its third-quarter profit forecasts.
Expectations were low going into the European corporate earnings season, but after its three busiest weeks the overall picture has been slightly better than expected with companies pulling off modest beats.
Banks were dragged lower by shares of Swedbank, which fell 3 per cent, after Estonia's financial regulator said it decided to open a misdemeanor case with regard to the Estonian subsidiary of the Swedish lender.
Among positive movers, shares of German healthcare group Fresenius gained nearly 5 per cent to top the STOXX index after beating revenue expectations on strong sales in emerging markets and growth in its dialysis unit.
Airbus edged 1 per cent higher after Indian budget carrier IndiGo placed an order for 300 A320neo-family jets worth at least US$33 billion at recent catalogue prices.
The catalyst for markets this week is expected to be the Fed meeting where officials are expected to cut interest rates for the third time this year, but focus will be squarely on further clues from the central bank on the policy path ahead.
"Markets are 90 per cent pricing in a cut," said David Madden, analyst at CMC Markets.
"I don't think they'll be leaving the door open for another cut in 2019 or early 2020 because that could just be setting that every time the markets fear a recession, a rate cut is warranted."