STOXX 600 logs worst month in a year on earnings, US election caution

Europe’s STOXX 600 slumped over 1.0 per cent on Thursday, notching the steepest monthly decline in a year, dragged down by bleak corporate earnings and as investors await more clarity on macroeconomic conditions and the US election outcome.

The pan-European main stock index closed 1.2 per cent lower, falling to its lowest level since mid August, with the retail sector leading an overall market decline with a 4.0 per cent slide. The STOXX 600 notched a monthly decline of 3.4 per cent, with the technology and real estate sectors bearing the brunt of a selloff this month.

France’s main CAC 40 index was the top monthly laggard among its regional peers.

The nail-biting US presidential election has kept investors on their toes. The potential for higher tariffs and increased defence budgets could deal a blow to an already struggling European economy in case of a Donald Trump win.

Some caution also emerged after a higher-than-expected rise in eurozone inflation in October and scope for a further pick-up in coming months, bolstering the case for caution in European Central Bank monetary policy easing. This follows a 25bps interest-rate cut this month.

“This (inflation data), together with better-than-expected GDP readings across the bloc, should be enough to kill off risks that the ECB cuts rates by 50bps in December,” according to Nick Rees, senior FX market analyst at Monex Europe.

“Underlying price pressures continue to ease, which should be enough to see a succession of 25-bp cuts over coming meetings.”

Earnings have also failed to excite investors, with industries such as heavyweight luxury companies, automakers and brewers, among others, hurt by anaemic Chinese demand.

Technology stocks were among the worst-hit, with sentiment towards the sector declining further after quarterly reports from US tech giants Meta Platforms and Microsoft.

Anheuser-Busch InBev, the largest beer maker, slumped 6.0 per cent after reporting third-quarter profits, revenues and volumes behind forecasts.

Lender BNP Paribas fell 4.2 per cent as third-quarter results from its investment banking division, lower-than-expected capital buffers and weaker-than-expected sales in Belgium disappointed investors.

Rubis slid 10 per cent after the French liquid-products-distributor cut its 2024 profit outlook, while telecoms group Swisscom dropped 5.0 per cent after lower nine-month revenue.

Meanwhile, Societe Generale jumped 11 per cent after the French bank beat profit estimates, with CEO Slawomir Krupa shaking up his management team.

Belgian biotech company Argenx climbed 6.0 per cent after better-than-expected third-quarter results.Maersk rose 7.8 per cent as stronger-than-expected third-quarter freight rates lifted its Ocean division and boosted full-year earnings expectations.

French energy infrastructure company Technip Energies was up 11 per cent after lifting its annual revenue guidance.