European Stocks Decline Amidst Poor Earnings and Economic Uncertainty

By Ankika Biswas and Pranav Kashyap

(Reuters) – Europe's STOXX 600 slumped over 1% on Thursday, marking the steepest monthly decline in a year, pulled down by disappointing corporate earnings as investors await clarity on macroeconomic conditions and the U.S. election outcome.

The pan-European main stock index closed 1.2% lower, reaching its lowest level since mid-August, with the retail sector leading the overall market decline, down 4%.

The STOXX 600 recorded a monthly decline of 3.4%, with the technology and real estate sectors taking the hardest hits this month. France's CAC 40 index was the worst performer among regional peers.

Investor anxiety surrounding the U.S. presidential election continues. If Donald Trump wins, higher tariffs and increased defense budgets could further strain the struggling European economy.

Concerns also grew after a higher-than-expected rise in eurozone inflation in October, suggesting a potential uptick in coming months and reinforcing caution in the European Central Bank's monetary policy easing following a 25 basis points interest rate cut this month.

Nick Rees, a senior FX market analyst at Monex Europe, commented that this inflation data, paired with better-than-expected GDP readings across the bloc, should quell fears of a 50 basis points rate cut by the ECB in December. He noted that underlying price pressures are easing, which may lead to a series of 25-bps cuts in upcoming meetings.

Earnings have disappointed many investors, particularly in sectors such as luxury goods, automotive, and beverages, which are grappling with weak demand from China. Technology stocks also fared poorly, with negative sentiment following quarterly results from U.S. tech giants Meta Platforms and Microsoft.

Anheuser-Busch InBev, the largest beer manufacturer, fell 6% after reporting third-quarter earnings, revenues, and volumes below expectations. Similarly, BNP Paribas saw a 4.2% decline as its investment banking division reported disappointing results and weaker-than-expected sales in Belgium.

Rubis dropped 10% after slashing its 2024 profit outlook, while Swisscom's revenue fall led to a 5% decrease in its stock. Conversely, Societe Generale surged by 11% after surpassing profit estimates, aided by CEO Slawomir Krupa's management shake-up.

Belgian biotech company Argenx rose by 6% following better-than-anticipated third-quarter results, and Maersk increased by 7.8% due to strong freight rates boosting full-year earnings expectations. Lastly, Technip Energies climbed 11% after raising its annual revenue guidance.