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EUROPEAN shares slipped on Thursday (Jun 27) on investor caution ahead of crucial global economic data and the first round of French elections, while retailer H&M sank after missing quarterly profit forecasts.
The pan-European Stoxx 600 closed 0.4 per cent lower, extending losses for the third straight sessions.
Retail stocks led sectoral declines with a 1.9 per cent drop as H&M, the world’s second-biggest fashion retailer, plunged 12.9 per cent after missing quarterly earnings forecasts and predicting a drop in June sales.
“H&M repeats the goal of an operating margin of over 10 per cent for 2024 and beyond. However, management warns that the conditions for achieving the goal this year have become more challenging,” said Magnus Raman, an analyst at Kepler Cheuvreux.
Sweden’s benchmark index slipped 0.2 per cent.
Separately, its central bank, Riksbank, held its key interest rate at 3.75 per cent as expected and indicated rates could ease further this year if inflation prospects remained the same.
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Basic resources lost nearly 0.9 per cent, with miner Anglo American falling 1.5 per cent after Berenberg cut the stock’s rating to “sell” from “hold”, citing concerns over the company’s new strategic plans.
GSK fell 4.5 per cent a day after the US CDC narrowed its usage recommendation for all respiratory syncytial virus vaccines and held off on recommending their use for people under 60.
Personal and household goods fell 1.3 per cent, led by 6.4 per cent fall in Burberry as the British retailer’s shares traded ex-dividend.
On the bright side, DS Smith jumped 15.6 per cent to the top of the benchmark index after Brazilian pulp maker Suzano terminated buyout talks with International Paper. The British paper and packaging firm had agreed in April to be bought by International Paper.
Kering added 4.7 per cent after BofA Global Research upgraded the French luxury goods company to “buy” from “underperform”.
All eyes are now on a key US inflation reading on Friday, which could play a role in gauging the Federal Reserve’s rate outlook. In the bloc, investors will await consumer price data from France, Spain and Italy.
Government bond yields across the eurozone edged higher on the day in the lead-up to the data, with the yield on the 10-year bund last at 2.45 per cent, hovering near two-week highs.
The first round of French parliamentary elections over the weekend will also be on investors’ radar.
Latest polls suggest the far-right National Rally (RN) is seen reaching 36 per cent of the popular vote, while President Emmanuel Macron’s centrist bloc is seen at 21 per cent.
Mohit Kumar, chief economist of Europe at Jefferies, said the base case was for an RN government “which would provide us with a buy-the-dip opportunity somewhere between the first and second round of elections”. REUTERS
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