European stocks dropped on Tuesday as the worst earnings season since 2020 rolled on. BMW AG led auto stocks lower after it warned of higher expenses for developing electric vehicles.
The Stoxx 600 Index fell 0.6% by 3:40 p.m. in London, with automakers leading declines in a sea of red in Europe. Greggs Plc slid after the bakery chain posted first-half results that were not strong enough to sustain its rally. Meanwhile, Diageo Plc shares gained on better-than-expected sales.
In other single stock moves, BP Plc advanced as the company raised its dividend and said it would buy back another $1.5 billion of shares. HSBC Holdings Plc shares rose after the lender’s second-quarter revenue beat estimates and it announced a new buyback program. UK shares turned negative after outperforming briefly, helped by gains in BP and HSBC.
“Earnings season has been solid in the UK,” Tineke Frikkee, head of UK equity research at Waverton Investment Management said, adding that pandemic-related comparatives continue to distort company growth rates.
Elsewhere, miners including Anglo American Plc, Glencore Plc and Rio Tinto Plc fell on the back of lower iron ore prices after fresh data highlighted concerns around China’s struggling property sector.
“Today’s economic agenda shifts the focus back to the weakness of the manufacturing sector, as well as the resilience of the US labor market,” said Michael Hewson, chief market analyst at CMC Markets UK.
“It is clear that the manufacturing sector is experiencing a clear deflationary impulse which is likely to continue to act as a drag on prices in the coming months,” he said. “The bigger question is whether this translates into a similar drag on the services sector, and here prices are proving to be slightly stickier.”
For more on equity markets:
- In UK Equity Gloom, High-Dividend Blue Chips Shine: Taking Stock
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--With assistance from Sagarika Jaisinghani.
