European stock markets declined on Tuesday, reversing earlier gains as investors brace for significant financial releases from major U.S. companies. The CAC 40 in Paris fell by 0.61%, while the UK’s Footsie dropped 0.80%, and the German Dax declined 0.27%. Notable corporate earnings, including disappointing results from BP, impacted market sentiment. As anticipation builds for U.S. megacap results, volatile trading is expected ahead of upcoming economic indicators and the U.S. elections. Oil prices also continue to decline.
by Pauline Foret
(Reuters) – European stock markets closed in the red on Tuesday, reversing earlier gains as investors brace for three critical days filled with financial results from significant large-cap companies.
The CAC 40 in Paris finished down 0.61% at 7,511.11 points, while the FTSE 100 in the UK declined by 0.80% and the German DAX dropped 0.27%.
The EuroStoxx 50 index fell by 0.40%, and both the FTSEurofirst 300 and Stoxx 600 lost 0.57%.
This trading session was characterized by the release of several corporate earnings reports, notably from Adidas, Lufthansa, Santander, and BP.
BP reported disappointing third-quarter results, causing its stock to decline and negatively impacting the broader European energy sector, which contributed to the downturn across major indices.
Market participants are now focused on the upcoming earnings from large-cap companies in the U.S., which are expected to provide clearer guidance for global indices that are experiencing pressure due to the upcoming U.S. election. Alphabet will kick off this earnings cycle tonight, with Meta and Microsoft slated to report on Wednesday.
‘We may see de-risking in the short term, resulting in volatile trading as we approach Tuesday’s elections,’ commented Michael Brown, a senior research strategist at Pepperstone.
STOCK PERFORMANCE
In terms of stock movements, BP’s shares fell by 5.11% following its lowest profit report in four years.
Novartis declined by 3.87%, despite the Swiss pharmaceutical giant raising its annual outlook for the third time this year.
Lufthansa shares dropped by 5.3% after announcing a 9% decrease in third-quarter sales.
Conversely, HSBC rose by 3.19% after exceeding expectations in its most recent quarterly report.
WALL STREET UPDATE
Across the Atlantic, the major indices displayed mixed results as investors awaited Alphabet’s earnings, the first of the ‘Magnificent Seven’ reporting this week.
The Dow Jones decreased by 0.23%, while the S&P 500 rose slightly by 0.1%, and the Nasdaq Composite increased by 0.53%.
Ford shares fell by 9.05% after the company revised its annual earnings outlook downward.
D.R. Horton also saw a decline, down by 8.55% as it missed expectations for the fourth quarter.
Meanwhile, Alphabet’s stock gained 1% ahead of its upcoming quarterly results.
DAY’S INDICATORS
Moving outside the U.S., the widely anticipated ‘Jolts’ report from the Labor Department revealed a faster-than-expected drop in job openings, signaling a potential softening of the labor market in the U.S.
A total of 7.44 million job openings were reported for September, falling short of the 8 million anticipated by analysts surveyed by Reuters.
CURRENCY MOVEMENTS
The dollar strengthened against the yen amid political uncertainties in Japan, where the ruling coalition lost its parliamentary majority in recent elections. However, it remained stable against other currencies as investors exercised caution ahead of the U.S. elections and several key economic indicators due later this week.
The dollar increased by 0.07% against a basket of major currencies, while the euro fell by 0.11% to $1.0800. The British pound rose by 0.23% against the dollar and 0.33% against the euro in anticipation of the upcoming British budget.
BOND YIELDS
Amidst the uncertainty surrounding the impending U.S. presidential elections, bond yields continue to climb. The yield on ten-year Treasuries increased by 4.4 basis points to 4.3224%, while the two-year yield rose by 1.2 basis points to 4.1517%.
The yield on the ten-year German Bund also saw a rise, up 4.8 basis points to 2.3330%, and the two-year yield increased by 4.0 basis points to 2.1700%.
OIL PRICES
Oil prices continued to descend on Tuesday after a 6% decline the previous day