European Stocks Fall Amid Earnings Worries, China Covid Flareup
European stocks dropped on Monday as traders braced for a crucial earnings season amid concerns about more Covid curbs in China as cases rise again.
(Bloomberg) — European stocks dropped on Monday as traders braced for a crucial earnings season amid concerns about more Covid curbs in China as cases rise again.
The Stoxx Europe 600 index fell 0.5% as of 10:05 a.m. in London, trimming an earlier slump of 1.5%. The declines followed three consecutive days of gains, with miners and energy firms leading the move lower as commodities prices dipped. Defensive sectors like health care and utilities outperformed.
Investors are preparing for the second-quarter earnings season as concerns rise that soaring inflation is weighing on consumer spending and crimping margins. The declines in Europe came as Chinese stocks had their worst day in about a month as the Covid resurgence combined with fresh fines for tech giants hit markets.
“Earnings expectations will come down this year and probably next year as well, which is somewhat priced,” Barclays Private Bank Chief Market Strategist Julien Lafargue said on Bloomberg Television. “The question is how big are the cuts we are going to see.”
Meanwhile on Monday, luxury stocks including Louis Vuitton-owner LVMH SE weakened as the China Covid outbreak spurred demand concerns.
Uniper SE fell as much as 9.3%, extending a recent plunge, after the German utility last week asked the government for a bailout.
For more on equity markets:
- Struggling Airlines Confront Another Tough Summer: Taking Stock
- M&A Watch Europe: Autogrill, Euronav, EDF, Nordex, Wihlborgs
- US Tech Stock Rebound Set to Pause as Focus Shifts to Earnings
- Wizz Air Cuts Summer Travel to Curb Air Chaos: The London Rush
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