European Stocks Drop on Earnings Reports, U.S.-China Tensions
European Stocks Drop on Earnings Reports, U.S.-China Tensions
(Bloomberg) -- European stocks fell for the first time in four days, as investors weighed earnings reports and renewed U.S.-China tensions.
The Stoxx Europe 600 Index was down 0.9% at the close. Sentiment worsened as China vowed retaliation after the U.S. ordered the closure of its consulate in Houston.
With the second-quarter earnings season underway, Melrose Industries Plc tumbled 14% after predicting it will “broadly break even” in 2020 and scrapping an interim dividend. Switzerland’s ABB Ltd. was an outperformer, up 2.8% after the factory automation gear supplier’s results beat analyst expectations.
European stocks closed yesterday at their highest level since the beginning of March, getting a boost after European Union leaders struck a deal on a huge stimulus package worth 750 billion euros ($860 billion) to offset the impact from the coronavirus. However, investors are watching second-quarter earnings reports carefully for signs that companies are bouncing back from the lockdowns imposed earlier in the year.
“Earnings in the second-quarter, pretty much planet-wide” will “be challenged -- Europe is not going to be any exception to that,” Arnab Das, global market strategist at Invesco, said by phone. “The first quarter and, really the second quarter, that was the worst period of the lockdowns, but I think that’s well in the market.”
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