European stocks ended sharply lower on Tuesday, after briefly returning to positive territory around noon, despite strong earnings figures from corporate giants BP and HSBC.
“Global equities are down again today, with weaker US consumer confidence and UK retail sales building on an already unwelcome drop in market sentiment,” said Josh Mahony, Senior Market Analyst at IG.
“The resurgence of coronavirus cases across Europe and the United States remains an issue holding back inventories, and that is unlikely to change given the continued deterioration we are seeing in recent weeks.”
Doubts about the timing of another US government stimulus package and the outcome of the upcoming November 3 US election, where Americans were to choose both their next commander-in-chief but with Senate control, also weighed on sentiment. to win.
Against this backdrop, the Stoxx 600 fell 0.95% to 352.58, alongside a 0.94% drop for the German Dax to 12,063.57 while the FTSE Mibtel fell 1.53% to 18 654.95.
Overnight, German Chancellor Angela Merkel said her country was on the verge of losing control in its fight against the coronavirus, telling colleagues in her Christian Democratic Union party that “ the situation was threatening ” and “ every day counts ”, 8,685 additional cases having been confirmed in the country on Monday.
Italians protested Monday night after the introduction of stricter measures, including the 6 p.m. closure of bars and restaurants. The intensive care capacity in the Paris region is two thirds.
“It’s hard to escape the feeling that investors are experiencing much higher levels of apprehension as to how the events of the next few days, as well as the coming weeks are likely to unfold, with respect to the prospect of tighter restrictions and new lockdowns, ”said Michael Hewson, analyst at CMC Markets.
“While the prospect of a postponement of new US stimulus measures scares investors in the US, events in Europe do not appear particularly optimistic either, with events in France, Spain and Italy suggesting that the virus is starting again. to get out of hand. , as infection rates accelerate exponentially and hospital admission rates begin to rise sharply. “
In equities news, Capgemini stock rose 2%, with the French IT and consulting services provider posting an 18.4% increase in third-quarter revenue and forecasting further but limited improvement of the fourth trimester.
HSBC shares were ahead after the bank announced plans to switch to a paid business model by revealing a 35% less-than-expected drop in third-quarter profits. Profit before tax for the three months ended Sept. 30 was $ 3.1 billion, compared to an average of $ 2.07 billion of analysts’ estimates compiled by the bank.
HSBC also said bad debt losses are expected to be in the lower end of the $ 8 billion to $ 13 billion range set earlier this year.
Shares of other banks initially followed suit, with Standard Chartered, Lloyds, NatWest and Barclays all higher, but then retreated.
Spain’s Santander bank advanced as it forecasted improved core earnings for 2020, citing better customer behavior on expired loan payments and more cost savings in Europe after going black in Q3 .
Statutory net profit tripled in the third quarter compared to a year ago, however, on an underlying basis, profit fell 18% in the same period to 1.75 billion euros due more coronavirus-related provisions.
Oil giant BP rebounded with a profit of $ 100 million on a replacement cost basis, despite a “significantly” lower result in its oil trading arm, after losing $ 6.7 billion in the previous quarter .