European shares retreat from record highs as financials, industrials tumble

FRANKFURT: European shares fell on Thursday, erasing earlier gains that pushed markets to record highs, as financial and industrial stocks tumbled and investors digested a flood of corporate earnings.

The pan-European STOXX 600 index finished 0.5 percent lower at 618.52 points, with most regional benchmarks also reversing course to close in negative territory. Financials weighed heavily on the index, with the banking sub-index sliding 1.8 percent. HSBC and Banco Santander each dropped more than 2 percent, leading the sector’s decline.

Industrial goods and services sub-index dropped 1.2 percent with Dutch payments processor Adyen falling 21.9 percent, marking its steepest one-day fall in over two years, after cautious guidance.

DSV, the world’s largest freight forwarder, posted its sharpest decline in roughly six years, sinking 10.5 percent.

Meanwhile, the European utilities index was down 0.4 percent, as it tracked a sharp slide in carbon prices after suggestions the EU should intervene in the market, a move that investors fear could squeeze the sector’s earnings.

“I think utility companies are the obvious targets. It’s going to hit margins and it also runs the risk of increasing inflationary pressures if those costs are passed on to the large energy consumers,” said Nick Saunders, CEO of trading platform Webull UK.

Luxury stocks bucked the trend, rising 1.3 percent as France’s Hermès touched a near one-month high following another quarter of steady revenue growth, powered by robust sales in the US and Japan.

On the M&A front, money manager Schroders shot up 28.6 percent after US asset manager Nuveen agreed to buy the UK company for 9.9 billion pounds (USD13.5 billion), creating a group with combined assets under management of nearly USD2.5 trillion.