European Markets Decline Amid Disappointing Earnings

By Pranav Kashyap

(Reuters) – European shares hit their lowest level in over a month on Wednesday, as disappointing earnings reports dented risk sentiment. Investors parsed through a slew of economic data from across the region.

The pan-European STOXX 600 fell 0.7% to 514.37 points after touching its lowest level since Sept. 23 earlier in the session.

Market Highlights

• Luxury stocks, often traded as China proxies, were the biggest drag on the benchmark index. Both LVMH and L'Oreal slid nearly 2%, while Kering lost 3.1%.
• The technology sector shed 1.6%, driven down by Capgemini's 7.5% drop due to a cut in its 2024 revenue target.

Market participants awaited key economic data, including the Euro zone's flash preliminary GDP for Q3 and October's consumer confidence data. The UK budget is also on investors' radar.

Deutsche Bank analysts noted, "The main focus will be on how much additional borrowing there is, particularly given it was just over two years ago that the mini-budget under Liz Truss sent UK markets into turmoil."

Company Performance

• GSK lost 3.1% after it lowered its 2024 vaccine sales forecast.
• Conversely, ASM International gained 4.3% after raising its 2025 forecast range.
• UBS gained 1% after posting robust third-quarter profit, nearly doubling its forecasts.
• Standard Chartered rose 3.5% after its quarterly profit topped market estimates.

Economic Insights

Germany's economy grew stronger than expected in the third quarter, although its unemployment rose more than anticipated in October, leaving the DAX down 0.5%.
Data indicated the French economy expanded by 0.4% in Q3, while the CAC 40 lost over 1%.
Spain's inflation rate rose to 1.8% in October, with its economy growing faster than expected, while Italy's economy stagnated.

Investors are also focused on comments from European Central Bank board member Isabel Schnabel, due later in the day.

Meanwhile, across the Atlantic, the neck-and-neck race between U.S. presidential candidates Kamala Harris and Donald Trump is at the forefront of investor concern ahead of the Nov. 5 election.

Bitcoin stood just below its peak of $73,803.25 as markets weighed the prospect of a Trump victory, which is widely seen as favorable for digital assets.