On Friday, for the time since the market selloff in March, European stocks have posted their monthly decline. Growing doubts over a global recovery from the coronavirus crisis overshadowed a batch of strong earnings from technology firms.
The pan-European STOXX 600 index gave up early gains to close 0.9% lower, pressured by a weak open for Wall Street as optimism from stellar earnings reports from big tech names Amazon, Apple and Facebook faded.
An early reading of the euro zone’s economy showed that the bloc shrank by a bigger-than-expected 12.1% in the second quarter, its deepest contraction on record as lockdowns ravaged business activity.
Spain’s benchmark index dropped 1.7% as the country posted the worst output slump, while GDP in Italy and France also fell sharply but less than forecast.
“Lockdown exits coupled with massive stimulus brought a strong rebound in activity during Q2, which supported the rally in equities, but recovery appears to be levelling off,” equity strategists at Barclays wrote in a note.
“Overall, choppy markets could continue due to elevated uncertainty, low conviction and tight summer liquidity.”
The STOXX 600 was down about 1% in July, with fears of a resurgence in COVID-19 cases also weighing on the mood as Britain imposed a tougher lockdown in swathes of northern England, while Spain saw a surge in new infections.
Technology stocks were among the few gainers, up 0.7% after forecast-beating results from Wall Street’s tech majors on Thursday.
The top gainer on the STOXX 600 was Finnish telecom network equipment maker Nokia, up 12.5% after reporting an unexpected rise in underlying profit as it reduced low-margin business.
“The strength of numbers from the ‘four horsemen of tech’ is leading to a halo effect for the tech sector and a resumption of growth stocks leading the market,” said Neil Campling, head of TMT research at Mirabaud Securities.
“Nokia results also help sentiment as the key for the equipment stocks is always on margins to get a sense of pricing.”
BNP Paribas rose 0.8% as it earned a higher-than-expected quarterly profit, boosted by a surge in fixed income trading and strong demand for corporate finance.
Almoat 50% of the companies listed on the STOXX 600 have reported quarterly earnings so far, and 64% of those have surpassed beaten-down profit expectations, according to Refinitiv data. (
Reported by Sruthi Shankar