LONDON, Oct 21 — European shares fell for a third straight session today, as losses in healthcare and construction stocks countered a lift from encouraging earnings from consumer giant Nestle and telecoms equipment maker Ericsson.
The pan-European STOXX 600 fell 1.0 per cent, in sharp contrast to Asian markets and Wall Street futures that steadied on hopes of a fresh US stimulus package.
Most European sectors slipped, with healthcare stocks proving the biggest drag, while banking stocks were supported by rising US and European government bond yields.
Nestle lifted its 2020 sales forecast following a quarterly beat, but shares inched lower after early gains.
Sweden’s Ericsson jumped 5.5 per cent as higher margins and China’s 5G rollout helped the company beat quarterly core earnings estimates.
“Earnings have been generally well above expectations, and guidance has been a positive surprise,” said Patrick Moonen, principal strategist in the multi-asset team at NN Investment Partners.
“But there are other elements that are currently at play and may have a bigger impact on the market performance than earnings.”
Moonen pointed to many European countries reimposing mobility restrictions following a surge in Covid-19 cases that could weigh on fourth-quarter economic activity.
The STOXX 600 has struggled to break out of a trading range since June, when it recouped a large part of the early pandemic-driven losses. The benchmark is still about 16 per cent below its all-time high.
London markets underperformed, with the exporter-heavy FTSE 100 hit by a surge in pound after bullish Brexit comments.
Vivendi rose 2.9 per cent after the French media group reported a bigger-than-expected quarterly sales and unveiled plans to list its most-prized asset, Universal Music Group, in 2022.
Third-quarter profits for companies on the STOXX 600 are expected to drop 34.8 per cent, according to Refinitiv data, a slight improvement from the 36.7 per cent predicted at the start of the earnings season.
Of the 29 companies that reported so far, 75.9 per cent have topped earnings expectations.
Gold miner Centamin Plc slumped 20.7 per cent to the bottom of STOXX 600 after cutting its 2020 production forecast.
Construction companies also took a knocking, with Assa Abloy, the world’s biggest lockmaker, falling 3.9 per cent after it reported a drop in quarterly sales. — Reuters
