European stocks, including the Stoxx 600 benchmark, experienced significant declines on Thursday, nearing the point of wiping out all gains made in 2023 due to disappointing corporate results from Europe and the US. As of 8:10 a.m. in London, the index fell by 1%, leaving it just 1.28% away from eliminating its year-to-date gains.
Major sectors such as automakers and banks suffered substantial losses, while utilities and energy sectors outperformed. Companies including Unilever (LON:ULVR) Plc, BNP Paribas (OTC:BNPQY) SA, and advertising giant WPP Plc (LON:WPP) witnessed stock declines after reporting below-par Q3 results. Influencing factors included price rises for products like Hellmann’s mayonnaise and Sure deodorant (Unilever), weaker revenue from fixed-income trading (BNP Paribas), and a slashed revenue growth outlook (WPP).
US stocks are also predicted to fall further due to concerns about Meta Platforms Inc (NASDAQ:META).’s earnings report and its impact on the tech sector, particularly regarding virtual reality and artificial intelligence spending. European stocks are heading towards their third consecutive month of losses due to surging US bond yields and fears of persistently high interest rates.
On Wednesday, European shares remained steady amid mixed earnings reports. Worldline's stock hit a record low after the firm downgraded its annual targets due to an economic slowdown. However, this was offset by positive outcomes from Dassault Systemes and Deutsche Bank. Dassault Systemes' shares surged 8% after the firm upgraded its full-year profit target, while Deutsche Bank's shares rose 8.2% following a pledge for more share buybacks and exceeding Q3 revenue forecasts.
Despite these positive outcomes, Kering (EPA:PRTP)'s shares fell 3.5% due to a sharp drop in Q3 sales, which also impacted rivals LVMH (EPA:LVMH), Richemont and Pernod Ricard (EPA:PERP), with their shares falling between 0.1% and 0.9%. The STOXX 600 index remained unchanged; miners saw a gain of 0.9%, while real estate stocks declined by 1.9%. To date, 54% of STOXX 600 companies have surpassed profit estimates this season.
The Monetary Policy Committee's decision on interest rates is awaited while all eyes are on the ECB’s policy meeting later Thursday.
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