(Bloomberg) -- European stocks posted the worst monthly drop in a year, as BNP Paribas SA and TotalEnergies SE led a slate of disappointing corporate earnings. The UK’s mid-cap index slid as worries about the government’s budget sent bonds tumbling.
The Stoxx Europe 600 Index fell 1.2% by the close, its third straight session of declines. Retail and technology stocks dropped the most, with all the sectors in the red.
Banks outperformed, driven by an 11% surge in Societe Generale SA as the lender beat estimates. BBVA SA, Banco Sabadell SA and ING Groep NV were more mixed after their results. BNP was the among the biggest overall drags on the benchmark index.
The UK’s FTSE 250 Index slumped 1.5% as bonds extended a selloff that was triggered by the Labour government’s plans for vast borrowing and fiscal stimulus over the coming years.
European stocks suffered their biggest monthly decline since October 2023 on concerns about stunted economic growth at home as well as weak demand and trade spats with key partner China.
Data Thursday showed euro-area inflation accelerated more than expected this month. In the US, the Fed’s preferred measure of underlying inflation posted its biggest monthly gain since April. Investors worry that a robust economy would lead to slower rate cuts from the US central bank.
Underwhelming quarterly reports from US technology behemoths has also hit sentiment. Investors await two major risk events next week — the US presidential election and the Federal Reserve’s latest policy decision.
Alberto Tocchio, a portfolio manager at Kairos Partners, said stock markets were due a correction ahead of the corporate earnings season as well as the US election.
“I don’t want to sound bearish as the economy in the US is strong and sound, but I would be more cautious short term as what will happen in the next few days is going to be fundamental to understand the moves for the next months,” Tocchio said.
For more on equity markets:
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- US Stock Futures Fall; Allegiant Travel, Corcept, Roku Fall
- Welcome to Budget Day: The London Rush
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--With assistance from Michael Msika.
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