(Bloomberg) -- European stocks fell further on Wednesday, dragged down by an unexpected drop in sales of French luxury behemoth LVMH, which followed a shock outlook from Dutch chip-equipment maker ASML Holding NV.
The Stoxx Europe 600 Index fell 0.3% to 519.11 at 9:05 a.m. in Paris, dropping further away from its Sept. 27 record high of 528.08 as the continent’s earnings season gets into full swing.
London’s FTSE 100 index stood out, rising 0.8% as UK inflation slipped below the Bank of England’s 2% target for the first time in 3 1/2 years, setting the stage for a second interest-rate cut next month.
Shares in LVMH, Europe’s second-biggest company by market capitalization, fell 6.4% after it reported after market close on Tuesday that its sales of fashion and leather goods fell for the first time since the pandemic, exposing a slump in demand from Chinese consumers.
The blow to the luxury sector comes after ASML’s outlook sparked a global rout in technology stocks, with combined market-value losses for an index of US-traded chipmakers plus the largest Asian stocks reaching more than $420 billion. LVMH and ASML each accounted for about 30% of the losses of the Stoxx 600.
Harry Heneage, a sales trader at Kepler Cheuvreux’s KCx in London, said investors would follow the investor call ASML will hold this afternoon very closely.
“If they say something to ease concerns, we could reverse quite hard,” he said, adding he expected European stock markets to suffer in the meantime from the LVMH trading update.
Heneage, however, cautioned that with China launching a series of stimulus measures, the drop in sales was somewhat backward-looking and not necessarily a pertinent indicator for the Chinese market’s prospects.
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