(Bloomberg) -- European stocks came under pressure from a deluge of earnings as Deutsche Bank AG and LVMH posted disappointing results.
The Stoxx Europe 600 closed 0.6% lower. Deutsche Bank tumbled as much as 9% after posting its first quarterly loss in four years. Shares in LVMH and Remy Cointreau SA dropped as sales slumped.
European stocks have been mixed so far in July, with weak Chinese economic data and a selloff in technology stocks offsetting optimism over expected further interest-rate cuts this year.
Less than half of the 27% of MSCI Europe firms to report have exceeded earnings estimates, while 35% missed, according to data compiled by Bloomberg Intelligence.
Investors have rushed to take profits by selling holdings in “the first wave of second-quarter results,” according to Bloomberg Intelligence strategists Laurent Douillet and Kaidi Meng. “There’s a high bar for near-term earnings.”
In the US, an unimpressive start to reports from the “Magnificent Seven” US tech giants weighed on sentiment. So far, about a fifth of S&P 500 companies have reported results. Investors seem particularly worried about sales, with less than half of companies beating expectations.
Analyst estimates have slid ahead of the season as they usually do, but market strategists including Morgan Stanley’s Michael Wilson and Barclays’ Emmanuel Cau have warned that the downgrades have been milder this time, which means a more demanding threshold for beats.
In France, the blue-chip CAC 40 Index slipped as much as 1.8%, touching the lowest closing level since January, as disappointing earnings from luxury behemoth LVMH added to the market stress resulting from the country’s political turmoil.
“France suffers both from the political situation which weighs on the valuation of domestic-focused stocks, like the financials, and its large luxury exposure,” said Harry Wolhandler, head of equities at Meeschaert AM.
Meanwhile, investors monitored regional economic data. Germany’s private sector unexpectedly contracted in July as country’s manufacturing malaise worsened — undermining hopes that growth will pick up in the second half of the year. France’s economy did better, coming close to stabilizing after contracting in the two previous months.
Elsewhere, Britain’s private sector companies reported a surge in confidence, hiring and new orders after Labour’s landslide election victory, a sign the new government may enjoy stronger growth.
Among other individual movers, ASM International NV fell after profitability missed expectations in the second quarter. EasyJet Plc rose as it said airline ticket prices are holding up during the crucial summer period. Reckitt Benckiser Group Plc climbed as much as 5% after saying it plans to sell some of its homecare brands and review options for its infant formula business.
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--With assistance from Julien Ponthus.
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