Europe stocks fall as Catalan crisis reaches new heights and mixed earnings
European stock markets dropped into the red Thursday morning, as the crisis surrounding Catalonia escalated and earnings season delivered a mixed bag of results.
The pan-European STOXX 600 slipped 0.59 percent, with all major sectors and bourses falling into negative territory.
Catalonia crisis reaches new heights
On Thursday, stocks came under pressure in morning trade, as uncertainty surrounding Catalonia’s future added volatility to market sentiment.
During morning trade, the Spanish central government stated that it would move to suspend Catalonia’s political autonomy after regional leader Carles Puigdemont failed to drop a bid for independence or provide clarity on the matter.
The government went on to add that it would therefore “continue with the procedures provided for in Article 155 of the constitution to restore legality in the self-government of Catalonia,” according to a statement published on the government’s website.
Meaning, the government is set to meet Saturday to propose measures to strip Catalonia of some powers and officially trigger Article 155 of the Constitution.
The Spanish IBEX slipped almost 1 percent in morning trade before paring some losses, while oil markets and U.S. futures also came under sharp pressure.
Earnings delivers mixed results
Tele2 was Europe’s top performer, soaring almost 7 percent on news that the operator has raised its guidance after third-quarter profit beat expectations.
Builders’ merchant Travis Perkins also rose on earnings, ticking 2.5 percent higher, after the group posted a rise in third-quarter sales. Carrefour and Pernod Ricard both climbed near the top of the STOXX 600, after both French firms published positive earnings reports.
However, not every company was celebrating when it came to earnings.
Unilever reported a slowdown in third-quarter revenue, placing blame on natural disasters and poor weather in Europe for slowing growth. Shares slipped over 4 percent, falling to the bottom of the household goods sector, which fell almost 1.5 percent.
Meanwhile, advertiser Publicis tumbled 6 percent in early trade after the group published third-quarter sales which missed analyst forecasts.
The STOXX 600’s worst performing stock in morning deals however was London-listed IWG, after the group issued a trading update which stated that group operating profit for the year was now expected to be “materially below market expectations.” Shares tanked 33 percent.
Kion Group also issued a profit warning Thursday, causing it to sink almost 9 percent.
Meanwhile, shares of the London Stock Exchange Group fell almost 1 percent after it announced that CEO Xavier Rolet would be leaving the group by the end of 2018.
EU Summit begins
Aside from Catalonia, Brexit will be lingering at the back of investors’ minds Thursday, as leading figures meet in Brussels.
The first day of the EU Summit is set to commence, where leading members of the European Union are set to meet in the Belgian capital, including U.K. Prime Minister Theresa May. One key topic which is expected to be up for discussion during the two-day summit will be that of how the Brexit negotiations are coming along.
Ahead of the meeting, a letter written by Theresa May and published Thursday said that she wanted to make it as easy as possible for EU citizens living in the U.K. to stay after Brexit, reassuring EU nationals that the issue “remains a priority” — a move that comes less than a week after the fifth round of Brexit talks hit a “deadlock” between the EU and U.K.
Elsewhere, major indexes in Asia traded mixed on Thursday, as investors pored over the latest economic data from China, including GDP figures for the third quarter, which met analyst expectations. Meanwhile, Hong Kong’s Hang Seng Index fell almost 2 percent at the end of its trading day.
In data news, British retail sales saw an unexpected sharp slowdown in the last month, with sales volumes falling 0.8 percent in September, according to the office of National Statistics. Sterling came under pressure following the data.
Source: CNBC
