By Paolo Laudani and Ankika Biswas
(Reuters) – European shares edged lower in choppy trading on Wednesday, dragged by miners, while weak earnings from heavyweights such as Germany’s largest lender Deutsche Bank and beauty giant L’Oreal pressured sentiment further.
The pan-European STOXX 600 index ticked 0.1% lower as of 0845 GMT.
Deutsche Bank’s shares fell 3% as the lender hiking its loan loss risk provisions by 38 bps overshadowed better-than-expected quarterly numbers at a group level, dragging the European bank index down 0.6%.
Basic resources was the worst-hit sector, losing 0.7% with Sweden’s Boliden dropping 3.4% following a UBS rating downgrade to “sell” from “neutral”. The chemicals index was also among the top sectoral losers, falling 0.7%. Akzo Nobel fell 4% to the bottom of the STOXX 600 after announcing third-quarter sales and core profit misses.
L’Oreal fell 3.8% after missing third-quarter sales estimates.
Meanwhile, automobiles led sectoral gains with a nearly 1% rise. Stellantis climbed 3% while Sweden-based Volvo Cars lost 3.6% after cutting its full-year sales growth forecast.
Apart from the ongoing corporate earnings season, which investors are using as a gauge for the continent’s economy, all eyes are on the still-too-tight-to-call U.S. election and the trajectory of interest rate cuts across major central banks.
“Imposing higher tariffs (under a Donald Trump reign) strengthens the case for a deep correction, as companies will need to restructure their import strategies, impacting profitability and putting pressure on stock prices,” said Nadia El Bilassy, Equiti.com’s senior market analyst.
“This is particularly concerning given the current AI hype that’s propping up the market; any disruption to that momentum could shake things and not in a good way.”
As for policy, Reuters reported European Central Bank policymakers have begun to debate whether interest rates need to be lowered enough to start stimulating the economy.
Back on the earnings front, Swedbank and Handelsbanken rose 7% and 5%, respectively, after the Swedish lenders posted better-than-expected quarterly profits.
Financial sector also weakened on the day, with Allfunds Group shedding 2.5% after third-quarter results and London-listed Man Group dropping 2% following a UBS rating downgrade to “neutral” from “buy”.
British bank Lloyds beat profit expectations citing increasing financial confidence among its customers, sending its shares up 1.8%
Thule was the top gainer on the STOXX 600, climbed 12%, following better-than-expected earnings, with Cargotec right behind, up 9%, after raising its full-yeaar outlook.
Of the STOXX 600 companies to have reported third-quarter earnings, 35.3% have beaten expectations, LSEG data showed on Tuesday, versus the typical beat rate of 54%.
(Reporting by Paolo Laudani in Gdansk and Ankika Biswas in Bengaluru; Editing by Janane Venkatraman)
