European stocks fall due to disappointing earnings and China's economic slowdown, impacting luxury brands

From BNN Bloomberg: 2024-07-16 11:48:32

European stocks fell on Tuesday as the start of the earnings season disappointed investors. The Stoxx Europe 600 dropped 0.3%, with basic resources, consumer stocks, and autos as the worst performers. China’s economic slowdown affected luxury brands like Hugo Boss, while Richemont saw strong sales despite some weakness in China. Rio Tinto cited muted Chinese demand and lower copper output guidance.

Analysts are closely watching European earnings for guidance on the impact of China and trade tensions. Swedbank AB reported a decline in net interest income, while Ocado Plc saw improvements in cash flow and profit guidance. The market missed out on a Wall Street rally fueled by speculation on Donald Trump’s future. Expectations are low, with the potential for positive surprises to boost prices.

The European Central Bank’s bank lending survey showed an increase in demand for consumer credit and housing loans, the first since 2022. Interest rates are expected to remain steady, but a possible cut in September may be hinted at. Chief investment officer Ben Seager-Scott believes positive surprises in earnings could lead to price movements, offering some optimism for the region’s recovery.

Investors are monitoring the impact of China’s economy on European stocks, especially as earnings trickle out. While some companies like Hugo Boss face challenges in key markets, others like Richemont are still seeing strong sales. Analysts are cautious about the potential impact of higher tariffs and trade tensions if there’s a change in government. European stocks could face further turbulence ahead.



Read more at BNN Bloomberg: European Stocks Fall as China Weakness Puts Downer on Earnings – BNN Bloomberg