(Bloomberg) -- European stocks dropped on Tuesday amid a busy session for earnings and as a global bond selloff extended further, fueled by cooling expectations of US Federal Reserve rate cuts.
The Stoxx Europe 600 Index was down 0.6% of 11:42 a.m. in Paris. Real estate and utilities, sectors which typically suffer when the cost of borrowing money rises, lagged while technology was boosted by SAP’s results.
The German software maker rose as much as 5.9% after it delivered a beat on several key metrics in the third quarter and boosted some elements of its guidance for the full year.
Among other individual stocks, Eurofins Scientific shares drop as much as 14% after the laboratory-testing company reported third-quarter revenue that missed estimates.
“The rise in yields is starting to threaten equity markets,” said Christopher Dembik, senior investment adviser at Pictet Asset Management.
He noted that the headwind blowing from the bond market was coming just as Europe was in the midst of a downbeat earnings season. So far about 47% of MSCI Europe companies reported results below expectations while only 27% delivered beyond, according to data compiled by Bloomberg Intelligence.
“There’s actually some resilience to this bad news,” Dembik argued, noting analysts had long been revising their earnings estimate downwards while investors had already priced in the lowered expectations.
For more on equity markets:
- Banks’ Market-Beating Rally Faces Earnings Test: Taking Stock
- M&A Watch Europe: Wendel, Monroe Capital; Mulberry; LightOn
- M&A Watch Europe: Wendel, Monroe Capital; Mulberry; LightOn
- US Stock Futures Unchanged; Zions, Cheesecake Factory Gain
- Borrowers’ Budget Blues: The London Rush
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