FRANKFURT: European shares nudged lower on Wednesday, after two sessions of gains, as a flurry of lacklustre earnings from major firms including French cosmetics giant L’Oreal and Birkin bag maker Hermes weighed on investor sentiment.
The continent-wide STOXX 600 index closed 0.2 percent lower. Major regional indexes were mixed with Germany’s DAX down 0.7 percent while Spain’s IBEX edged 0.1 percent higher.
Technology stocks dragged heavily on the European benchmark index, down 1.4 percent. Semiconductor-linked stocks including ASM International, ASML and STMicroelectronics dipped after a dour quarterly update from US peer Texas Instruments.
L’Oreal fell 6.7 percent after the company reported weaker-than-expected third-quarter sales, and Hermes lost 2.3 percent after its outlook for a slight improvement in key market China failed to excite investors.
Both stocks weighed on the personal and household goods sector, while the broader luxury index declined 1.2 percent.
Mabrouk Chetouane, head of global markets strategy at Natixis Investment Managers, said the earnings reports from the luxury sector were “clearly flagging the fact that the recovery in China is still struggling”.
On the flip side, energy stocks were the biggest boost to the market, up 0.7 percent, tracking a 2 percent gain in oil prices.
London’s FTSE 100 outperformed peers with a 0.9 percent rise after data showed British inflation and a key underlying measure of price growth both unexpectedly held steady in September.
It raised expectations for an interest rate cut from the Bank of England before the end of this year. Most British homebuilders and real estate stocks rose, among the biggest gainers on the STOXX 600.
Defence companies, which rose earlier on news that a planned summit between US President Donald Trump and his Russian counterpart was put on hold, pared gains and the wider index reversed course to close 1.1 percent lower.
“The delay tempers optimism about a potential Ukraine peace framework, contributing to the (already) cautious tone,” said David Morrison, senior market analyst at Trade Nation.
Next week’s monetary policy decisions by the European Central Bank and US Federal Reserve will be on the radar, amid a US government shutdown at a time when markets are focused on employment data to gauge the monetary policy path of the Fed.