(Bloomberg) -- European equities dropped at the open as major companies spooked investors with sales declines and profit warnings.
The Stoxx Europe 600 retreated 0.6%. After Asos Plc cut its profit guidance, sinking 22%, Boohoo Group Plc, a fellow fashion retailer, tumbled as much a 5.1%. SAP SE declined up to 10% after a decrease in growth in new cloud bookings. Richemont fell 3.5% after reporting a surprise drop in revenue from its watch business.
Investors are carefully watching earnings and profit outlooks for signs of how strong the effect of the U.S.-China trade spat has been on corporations and their plans. Europe’s equity benchmark is up 15% this year, compared to 19% for the S&P 500, as traders have been buoyed by hopes of a trade deal and softer monetary policy.
“Profit warnings and lackluster reporting continue,” said Ulrich Urbahn, head of multi-asset strategy and research at Joh Berenberg Gossler & Co. in Frankfurt. “There will be better buying opportunities later this year if we have more clarity on the trade truce and Brexit. We expect a volatile sideways market for the next months and as we are at the upper end at the moment, there should be better entry points."
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