Investors will continue to monitor U.S. fiscal stimulus talks, with Congressional Democrats and the White House on Monday hinting at progress as lawmakers look to hammer out a new coronavirus relief bill.
Tuesday marked another busy day for major corporate earnings, with BP, Diageo, Bayer and Hugo Boss among those reporting.
European stocks pulled back Tuesday morning as investors reacted to a slew of corporate earnings, after positive manufacturing data around the world drove stocks higher to start the week.
The pan-European Stoxx 600 fell 0.5% in the first hour of trading, with food and beverages falling 1.4% to lead losses while oil and gas jumped 1.9%.
Stocks had swung higher Monday after July’s final IHS Markit manufacturing PMI (purchasing managers’ index) reading showed manufacturing activity across the euro zone expanded for the first time since April 2019.
Strong manufacturing data out of the U.S. also helped boost sentiment, and stocks in Asia Pacific broadly advanced overnight after the Reserve Bank of Australia opted to leave its monetary policy stance unchanged.
Markets started Tuesday’s session on the front foot, but a flurry of weak earnings reports from major European corporates reversed the momentum in early deals.
Investors will continue to monitor U.S. fiscal stimulus talks, with Congressional Democrats and the White House on Monday hinting at progress as lawmakers look to hammer out a new coronavirus relief bill.
Meanwhile, the World Health Organization (WHO) on Monday cautioned that there may never be a “silver bullet” to defeat the coronavirus pandemic, after Friday saw the largest worldwide increase in new cases to date.
In Europe, Commerzbank has elected Hans-Joerg Vetter, the former head of the Landesbank Baden-Wuerttemberg (LBBW), as the new chairman of its supervisory board in open defiance of the wishes of top shareholder Cerberus Capital Management.
Euro zone producer prices for June are also expected at 10 a.m. London time.
Earnings in focus
BP reported a $6.7 billion second-quarter loss before the bell on Monday and cut its dividend after downgrading the value of some of its assets on expectations of lower commodity prices. The British oil and gas giant saw its shares gain 6% in early trade.
Diageo reported a larger-than-expected 8.4% drop in organic sales for the year up to June 30, sending the world’s largest spirit maker’s stock tumbling 6.6% to second-bottom of the Stoxx 600. British office provider IWG dropped 7.7% after its half-year earnings report.
Bayer shares fell 3.7% after the German drugs and pesticides company posted a 9.5 billion euro ($11.2 billion) net loss for the second quarter, hit by a $10.9 billion settlement for U.S. law suits alleging that its weedkiller Roundup caused cancer.
Easyjet climbed 7.2% after its third-quarter trading update, while Merlin Properties was the top performer in the European blue-chip index in early trade, bouncing more than 12% on media reports of a possible takover bid from Brookfield.
– CNBC.