(Bloomberg) — European stocks fell at the start of a busy week for earnings. Investors remained cautious about the health of European economies and rising tensions in the Middle East.
The Stoxx Europe 600 Index slid 0.5% as of 12:41 p.m. in London. Real estate and consumer products and services were the worst laggards, while energy stocks outperformed as oil prices rebounded from last week’s declines. Miners were supported as iron ore and base metals rose after Chinese banks cut their benchmark lending rates by more than expected.
Among single stocks, JDE Peet’s NV soared after investment holding company JAB agreed to acquire Mondelez International Inc.’s stake in the coffee retailer. Munich Re fell after getting a downgrade, and Sandvik AB dropped after missing operating profit estimates. SGS SA and Intertek Group Plc were also among the worst performers on the Stoxx 600 after analysts at RBC downgraded both names, citing more caution on the testing, inspection and certification sector.
Investors are keeping an eye on the health of major economies, with France getting a downgrade from Scope Ratings in another warning on the state of the country’s finances. Geopolitics are also center stage, with developments in the Middle East, the war in Ukraine, and the upcoming US election on the radar.
Disappointing results last week are also clouding sentiment. Weak earnings from the likes of ASML Holding NV will likely weigh on technology index heavyweights like SAP SE, which is due to report after the market close today, said Joachim Klement, head of strategy, economics and ESG at Panmure Liberum.
Adding to this view, negative earnings revisions and the soft first batch of third-quarter results suggest the rebound in cyclical stocks could be losing steam, said JPMorgan strategists.
Next month’s US election will also keep many investors on the sidelines as the outcome remains uncertain.
European company executives are more preoccupied than their US counterparts about Donald Trump’s promise to impose tariffs on all imports if he retakes the White House, with mentions of “tariff” more frequent in European company conference calls than those in the US.
“Overall, it seems that investors are increasingly cautious about the medium-term outlook over the next six months,” said Klement at Panmure Liberum. “Advances in selected stocks will thus be used to take profits.”
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