European shares dip on Wednesday

European shares fell on Wednesday, with the pan-European STOXX 600 index dropping 0.8 per cent to 511.24 points by 0830 GMT, driven by a 1.8 per cent slump in the personal and household goods sector.

Luxury giant LVMH saw its shares falling nearly 5 per cent after missing second-quarter sales estimates due to reduced spending by Chinese consumers.

Shares of Christian Dior, part of LVMH’s fashion and leather goods division, also declined by 5.3 per cent. Consequently, the French CAC 40 index, which includes both companies, dropped 1.6 per cent, marking the worst performance among regional bourses.

Daniela Hathorn, senior market analyst at Capital.com, stated that companies with significant exposure to China are facing cautious investor sentiment due to a disjointed earnings season.

Tech shares fell by 1 per cent, with Temenos declining 3.5 per cent after the Swiss banking software company lowered its annual outlook, citing an impact from a short-seller report by Hindenburg Research.

Poor earnings from US tech giants Tesla and Alphabet further dampened market sentiment. Tesla’s disappointing results spilled over into European markets, while Alphabet’s performance was scrutinised for shortcomings, making investors more selective.

The STOXX 600 has been volatile amid mixed earnings reports as the earnings season in Europe and the US kicks off on a rocky note.

HCOB’s preliminary composite purchasing managers’ index data revealed that eurozone business activity growth stalled in July. A modest expansion in the services sector failed to offset a more pronounced downturn in manufacturing.

Other notable stock movements included a 12.6 per cent drop for Iveco Group, following a 4 per cent decrease in its second-quarter operating profit, and a 6.7 per cent loss for Deutsche Bank after reporting its first quarterly loss in four years.

In contrast, British consumer goods company Reckitt Benckiser saw a 3.2 per cent increase in its shares after announcing plans to exit its home care brand portfolio by the end of 2025.