EUROPE’S benchmark stock index dropped on Wednesday (Apr 24) as financials sagged on disappointing earnings from Swedish lender Handelsbanken, while technology stocks limited losses after ASM International’s strong forecast.
The pan-continent Stoxx 600 index closed 0.5 per cent lower after initially rising to its highest in over a week.
Bank shares lost 1.2 per cent after Handelsbanken tumbled 12.1 per cent following a first-quarter net profit miss, while SEB shed 3.7 per cent after posting weaker-than-expected interest income in the first quarter.
Financials led sectoral declines, down 2 per cent, with Allfunds losing 11 per cent after a report that the fund manager abandoned talks over a potential sale.
UBS fell 2.9 per cent after the bank’s executives flagged major concerns about the Swiss government’s plan to hit it with tougher capital requirements.
Tech stocks rose 1.3 per cent after ASM International jumped 11 per cent as the wafer-processing equipment supplier raised its second-quarter revenue forecast.
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Of the 34 Stoxx 600 companies that have reported first-quarter earnings, 61.8 per cent exceeded estimates, compared with a long-term average of 54 per cent, LSEG data on Tuesday showed.
Sentiment soured after Bundesbank president Joachim Nagel noted eurozone inflation could remain stubborn, so a possible interest rate cut by the European Central Bank (ECB) might not be followed by further policy easing.
“The ECB may potentially cut by 25 basis points in June and then hold for a month or two in order to assess its impact,” said Daniela Hathorn, senior market analyst at Capital.com.
“But out of the major central banks, the ECB looks the most likely to cut.”
European stocks had a stellar run in the previous two quarters, before pausing in April as geopolitical tensions and concerns around a weak earnings season overshadowed optimism of an imminent rate cut.
Evotec slumped 32 per cent after the German biotech firm announced a disappointing 2024 outlook.
Drugmaker Roche lost 3.3 per cent after first-quarter sales slipped 6 per cent on the loss on Covid-related revenue.
Volvo Car slumped 10.3 per cent after the Swedish automaker posted downbeat quarterly profits, while Kering fell 6.9 per cent after the luxury goods maker forecast a 40 per cent to 45 per cent plunge in first-half operating profit.
Temenos dropped 8.7 per cent after the Swiss banking software group reported that short seller allegations from February led to delays in client decision-making in the first quarter.
Swedish industrial manufacturer Atlas Copco jumped 8.4 per cent after surpassing estimates for first-quarter order intake in every business division.
Norwegian insurer Storebrand climbed 7.5 per cent after it announced first-quarter results beat and a share buyback programme. REUTERS