(Bloomberg) -- European stocks tumbled on the busiest day of the corporate earnings season, following underwhelming reports from a slate of companies including Kering SA and Nestle SA.
The Stoxx Europe 600 Index was down 0.7% at the close in London. France’s CAC 40 Index sank 1.2%, bringing total declines since a May peak close to 10%.
The European consumer products sector dropped, with Kering sliding after it warned profit was set to tumble in the second half of the year as luxury demand cools. Other luxury-goods makers Hermes International and Burberry Group Plc also fell.
Nestle dropped 5.1% as it downgraded its sales outlook for the year, struggling to compensate for smaller price increases with higher volumes. Stellantis NV sank as its earnings plunged in the first half of the year.
The technology and media sectors were the biggest decliners, while personal care and telecoms outperformed.
A rally in European stocks has lost momentum after the benchmark index hit a record high in mid-May, as investors worried about geopolitical risks, economic growth and corporate earnings. A Bloomberg survey of market strategists showed they see little upside for the Stoxx 600 into the end of the year.
The second-quarter earnings season has also broadly disappointed so far. More than 40 of MSCI Europe companies have reported results, and just about half had beaten analysts’ profit estimates, according to data compiled by Bloomberg Intelligence.
Still, European stocks have managed to hold on to a lead over the US, where a rout in the biggest technology stocks has wiped out about $2 trillion from the market capitalization of the Nasdaq 100 index.
Panmure Liberum strategist Joachim Klement said he sees a limited spillover into Europe from the selloff in US peers.
“The advantage Europe has is that, unlike the US, it is less concentrated and not that tech and AI heavy,” Klement said. “Plus, we are seeing more and more investors shift their allocation from the US into European stocks, providing additional support on a relative basis.”
On Thursday, 53 firms in the Stoxx 600 were scheduled to report results, the biggest count by far of any day in the season, according to data compiled by Bloomberg.
Among other earnings-driven moves, BE Semiconductor Industries NV slumped as it reported second-quarter orders below the average analyst estimate.
Roche Holding AG, on the other hand, rose as it raised its 2024 profit forecast, with new drugs like Vabysmo for eye disease driving revenue for the latest quarter and first half of the year. Sanofi also climbed as it lifted its earnings forecast for the year.
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--With assistance from Jan-Patrick Barnert.
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