European shares edged lower on Thursday, weighed down by German engineering group Siemens after a second-quarter industrial profit miss, while automobile and energy stocks were also dragged by multiple industry heavyweights trading ex-dividend.
The pan-European STOXX 600 was down 0.1% as of 0830 GMT, after hitting a fresh record high on Wednesday, as a lower-than-expected rise in US consumer prices in April boosted bets for a September rate cut by the Federal Reserve in a boost to global sentiment.
“The door for central banks (to cut) have been opened again after they looked firmly shut sometime back,” said Andreas Bruckner, European equity strategist at BofA Global Research.
Economists are still expecting a June rate cut by the European Central Bank (ECB), Bruckner added.
The STOXX 600 gained for nine straight days till Wednesday as investors cheered robust corporate earnings in the face of the ECB’s all-time-high interest rates after European shares’ record-breaking run came to a halt last month.
“Improvements are coming through in terms of earnings beats, aligning with the idea the first quarter has seen green shoots in the macro dynamics in Europe,” BofA’s Bruckner said.
Automobile was the worst-hit sector, down 1%, as Bayerische Motoren Werke and Daimler Truck dropped 5.3% and 2.6%, respectively, upon trading ex-dividend.
European shares close at record high
Energy also fell 1%, with oil major BP shedding 2% on trading ex-dividend and Eni losing 2.3% after Italy’s Treasury sold a 2.8% stake in the energy group for 1.4 billion euros.
Siemens declined 4.3%, the biggest drag on the STOXX 600, as second-quarter industrial profit fell 2% and missed estimates after a slowdown at its flagship factory automation division.
Video games group Ubisoft slid 15.4%, weighed down by “lacklustre” guidance and “uneven” FY2024 results. Belgian materials technology and recycling group Umicore lost 5.4% after naming Bart Sap as chief executive officer in a surprise move.
Limiting losses on the STOXX 600, Roche jumped 4% after an early-stage trial showed the obesity drug candidate by newly acquired Carmot Therapeutics led to significant weight loss.
Insurance topped sectoral gainers, up 1.5%, with Zurich Insurance climbing 2% after higher first-quarter property and casualty premiums and Swiss Re jumping 4.2% after first-quarter results beat and plans to exit its digital white-label business.
Swedish engineering and architecture consultancy firm Sweco soared 15.1% after first-quarter core earnings beat expectations.
Of the STOXX 600 companies that have reported first-quarter earnings to date, 60.7% beat estimates, versus the typical quarterly 54% beat rate, weekly LSEG data showed on Tuesday.
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