European shares opened in negative territory on Thursday, as a flurry of corporate earnings for the third quarter triggered sharp price moves, many negative, across some sectors and bourses.
The pan-European STOXX 600 <.STOXX> was down 0.1 percent, failing to recover from the previous session’s dip and ignoring new highs in Asia and on Wall Street.
“My feeling is that there is some kind of scepticism that is a little more present in Europe, as the main drivers of the markets, notably the ‘Trumpflation’ trade, are fading away,” Pierre Martin, a senior sales trader at Saxo Bank, said.
“Trumpflation” refers to bets on rising rates, inflation and stock prices made after Donald Trump won the U.S. presidential election a year ago this week.
Martin added that investors were still digesting this season’s corporate results and were finding it hard to position themselves without any new clear catalysts to drive the market up again.
He also noted that investors were expecting positive earnings and could be unforgiving for those which fail to deliver on expectations, as it was the case with companies such as Vestas (>> Vestas Wind Systems).
The world’s largest maker of wind turbines was the worst performer of the STOXX 600, falling over 17 percent as it lowered its 2017 profit margin outlook.
British luxury brand Burberry (>> Burberry Group) was another big loser, down about 10.8 percent after first-half results, while Hikma Pharmaceuticals (>> Hikma Pharmaceuticals) lost 5.9 percent after lowering 2017 revenue guidance for its generics business for a third time.
It was not all bad though in the sector as AstraZeneca (>> AstraZeneca) rose 1.6 percent as the pace of decline in drug sales slowed in the third quarter.
German commercial broadcaster ProSieben (>> Prosiebensat 1 Media SE) was also among companies being punished and was down close to 7 percent.
Still in Germany, Siemens (>> Siemens) was down 1.7 percent after posting a worse-than-expected 10 percent drop in industrial profit for its fiscal fourth quarter.
ArcelorMittal (>> ArcelorMittal) was trading in the red, down 1.3 percent, after EU antitrust regulators said they would investigate whether its proposed purchase of Italian steel plant Ilva would lead to price hikes.
Shares in the financial sector were leading gainers with Italian banks bouncing back after losing ground on Wednesday due to worries over non-performing loans and Creval’s (>> Banca Piccolo Credito Valtellinese SpA) move to raise cash to shed bad debts.
BPER Banca (>> BPER) rose over 10 percent after Italy’s sixth-largest bank said its core capital had strengthened in the third quarter and ruled out tapping investors for cash.
Italy’s biggest bank, UniCredit (>> UniCredit SpA) rose 3.4 percent and other smaller players were also rising with Ubi Banca (>> UBI Banca) up 4.6 percent and Banco BPM 3.7 percent.
Italy’s biggest insurer, Generali (>> Assicurazioni Generali) was flat after keeping its guidance unchanged.
Commerzbank (>> Commerzbank) also rose, gaining 3.3 percent after it swung to net profit in the third quarter. The German bank reiterated it was still expecting to eke out a “slightly positive” net profit for the full year.
Still in the financial sector, shares in Dutch insurer Aegon (>> Aegon) were up 5.2 percent as it reported earnings above consensus.
Source: Reuters (Reporting by Julien Ponthus, editing by Sujata Rao and Ralph Boulton)