European stocks slammed by lackluster earnings, Fed shakes

The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, April 29, 2022. REUTERS/Staff

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  • Boohoo plunges after warning of tough year
  • Equinor wins after record profit
  • Oil stocks rise as EU mulls Russian crude ban

May 4 (Reuters) – European stocks fell on Wednesday, weighed by disappointing earnings and investor jitters ahead of a policy move by the U.S. Federal Reserve, which is expected to raise rates to their highest since 2000 to tame inflation.

The pan-European STOXX 600 index (.STOXX) fell 1.1% and most regional indices were also in negative territory.

Retailers (.SXRP) led the sector losses in Europe, with British online fashion retailer Boohoo (BOOH.L) plunging 12.4% after inflation in transport and logistics costs drove down 28% of its annual base earnings. Read more

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Pandora (PNDORA.CO) fell 2.1% after the Danish jeweler reported heightened uncertainty around its full-year earnings forecast. Read more

Swedish carmaker Skanska (SKAb.ST) plunged 9.8% after reporting a drop in profits and bracing for possible project cancellations in its Eastern European markets as a indirect effect of the war in Ukraine.

Overall, investors appeared to be nervous ahead of the U.S. central bank’s policy decision, scheduled for 18:00 GMT, when it is expected to raise interest rates by 50 basis points and announce the start of its balance sheet reduction. of 9 trillion dollars. Read more

“The Fed’s rate hike could be broadly priced in, but markets are clearly worried that an even more hawkish FOMC could cause a spike in volatility that could push indices back below market lows. last week,” said Chris Beauchamp, chief market analyst at online trading. IG platform.

“Risk assets are still struggling to string together more than about two positive days in a row, and it seems unlikely that (Fed Chairman Jerome) Powell can offer much good news.”

There have been heightened expectations for rate hikes from the European Central Bank, which has removed stimulus at the slowest pace possible this year, but a surge in inflation is now putting pressure on policymakers .

Traders will be looking for clues on how far and how fast he is willing to go amid growing fears that China’s COVID-19 lockdowns, rapid inflation and conflict in Ukraine could dampen economic growth momentum. worldwide.

Still, first-quarter earnings expectations have risen in Europe, with analysts estimating earnings growth of 35.4% for companies on the STOXX 600, according to Refinitiv IBES data, against a growth forecast of 27, 1% last week.

Norway’s Equinor (EQNR.OL) gained 3.1% as the company posted record quarterly pre-tax profit after conflict in Ukraine sparked an energy supply crisis that pushed up natural gas prices at unprecedented levels. Read more

Oil and gas stocks (.SXEP) climbed 0.4% as crude prices rose as the European Union, the world’s largest trading bloc, announced plans to phase out imports of crude. Russian oil.

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Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Sherry Jacob-Phillips and Bernadette Baum

Our standards: The Thomson Reuters Trust Principles.

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