The Stoxx Europe 600 index erased gains amid mixed earnings and contrasting economic data from Germany and France, the region’s two biggest economies. While business activity in Germany surged, France’s composite purchasing managers’ index unexpectedly fell. The country’s CAC 40 stock index declined.
Among companies reporting earnings in Europe, French drugmaker Sanofi SA, UK lender NatWest Group Plc, Swiss cement producer Holcim AG and Swedish defense firm Saab AB gained after beats. Aluminum supplier Norsk Hydro ASA and Dutch lights manufacturer Signify NV dropped after missing analysts’ estimates.
The strong earnings season so far has helped markets to ride out geopolitical and trade tensions. With nearly quarter of the reporting done, year-on-year growth in earnings-per-share has been 4% in Europe and 14% in the US, better than expected, according to Barclays Plc strategists. The real test will come with big-tech results starting next week, they said. Alphabet Inc. and Meta Platforms Inc. are slated to report on Oct. 29 and Apple Inc. the day after.
“We do not think that we are out of the volatility period and market sentiment still feels fragile,” said Mohit Kumar, chief economist and strategist at Jefferies International Ltd. “Investor positioning has shown some signs of cleanup, but overall positioning still remains on the long side. Thus, we are keeping our low-risk mode for now, while maintaining our medium term bullish view.”
