Europe open: Stocks at seven-week low as earnings disappoint

31st Oct 2024 07:58

(Sharecast News) - European stocks dropped to their lowest in seven weeks on Thursday as investors digested a barrage of economic data and weak corporate earnings from a long list of blue-chip names.

The Stoxx 600 was down 2.7% at 508.54 by 0955 CET, its lowest level since 11 September. The index has now fallen by 2.4% in the past three trading sessions alone.

BNP Paribas, Smith & Nephew and AB InBev were among the worst performers in Europe after disappointing with their third-quarter results.

In economic news, retail sales in Germany unexpectedly rose for the third straight month in September, according to data from the Federal Statistical Office. Retail sales were 1.2% higher over the month in price-adjusted terms, following a revised 1.2% increase in August and much better than the 0.5% drop expected. Compared with the year before, retail sales growth picked up to 3.8%, from the 2.2% annual gain in August.

The annual inflation rate in France rose to 1.2% in October, up from a three-year low of 1.1% in September, though analysts had expected no change.

Inflation figures from the wider eurozone were due out at 1100 CET and are expected to show that price growth picked up to 1.9% year-on-year this month, from 1.7% previously. However, the core rate of inflation is forecast to slip to 2.6% from 2.7%.

Elsewhere, manufacturing activity in China expanded in October for the first time since April, according to figures by the National Bureau of Statistics. The official purchasing managers' index rose to 50.1 from 49.8 in September, beating expectations for a reading of 49.9. Meanwhile, the non-manufacturing PMI rose to 50.2 in October from 50.0 in September.

Market movers

French financial services group BNP Paribas dropped 6% after underwhelming with third-quarter profit growth 5.9% to €2.87bn, matching analysts' expectations. While the investment banking division performed well, the retail business saw revenues fall as a result of lower user-car prices.

London-listed medtech group Smith & Nephew tanked 12% as it slashed full-year sales guidance on weaker-than-expected sales in China in the third quarter. Annual revenue growth is now tipped to come in at around 4.5%, down notably on a previous forecast for between 5% and 6%.

Belgian brewing giant AB InBev fell more than 3% after reporting a 2.4% drop in organic volumes in the third quarter due to weak consumer demand in China. The consensus forecast was for just a 0.4% decline year-on-year.

German industrial titan Siemens was in the red, albeit in line with the wider market, after a $10.6bn deal to take over US software group Altair. Siemens said the deal will "accelerate the digital and sustainability transformations of our customers by combining the real and digital worlds".

Shell rose in London after third-quarter profits dipped less than expected. The oil major said lower commodity prices pushed adjusted earnings down 4% to $6.03bn, well ahead of the $5.36bn expected by analysts.

Also in the UK, Anglo American's shares were rising after BHP Group quashed speculation that it has walked away from its pursuit of the mining firm. At an AGM this week, BHP's chair said the company had "moved on" after three previous takeover offers were rejected, but on Thursday clarified that this was not an official withdrawal under rules of the UK Takeover Code.

Auto giant Stellantis gained in Madrid despite reporting that third-quarter shipments dropped 20%. The company said it was working quickly to cut US inventories and remains on track to launch 20 new models this year.