STOXX 600 drops on bleak earnings from industry majors

by Jonathan Adams
European STOXX

The pan-European STOXX 600 ended 0.6% lower, after hitting a more than one-week high intraday

Europe’s main stock index dropped on Tuesday, amid bleak quarterly results from industry majors such as energy giant BP, drugmaker Novartis and lender Santander, while caution also prevailed ahead of key economic data.

The pan-European STOXX 600 ended 0.6% lower, after hitting a more than one-week high intraday.

BP’s shares declined 5% to July 2022 lows after the company’s third-quarter profit dropped to the lowest in nearly four years, pushing the energy sector index 1.2% down.

Novartis stock decline 4% as investors focused on the Swiss company’s lower-than-expected sales of a promising radiopharmaceutical, even as it raised its 2024 earnings guidance for the third time.

The healthcare sector index slipped almost 1% to a three-week low, also dented by a 7.4% decline in dental-implants maker Straumann following a weak third-quarter performance in its North American business.

Travel and leisure was the worst-hit sector, as shares in German airline group Lufthansa plunged 5% after it reporting lower third-quarter operating profit.

However, Asia-focused lender HSBC Holdings climbed 3.3% after better-than-expected third-quarter profit and a $3 billion share buyback programme.

Of the STOXX 600 companies that have reported third-quarter earnings to date, 53% of them exceeded estimates, short of the typical beat rate of 54%, according to new LSEG data.

Investors are also turning focus to economic data including the euro zone bloc’s third-quarter GDP and October inflation, and U.S. GDP and non-farm payrolls print, all due this week.

Adding to economic concerns that prompted an ECB rate cut earlier this month, the German Chamber of Commerce and Industry cut its previous forecast for a stagnation and expect zero growth in 2025 for Europe’s biggest economy.

After touching a record high last month, the STOXX 600 has turned sluggish. Caution surrounding the U.S. election could potentially delay the index’s journey to a key 530-point level.

The 530 is a possibility before the end of the year, given the fundamentals potentially support it. But I think that would very much depend on the outcome of the U.S. election, according to Fiona Cincotta, senior market analyst at City Index.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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