European stocks took a hit on Thursday due to disappointing earnings reports from key players including WPP (LON: WPP ), Unilever (LON: ULVR ), Mercedes Benz (ETR: MBGn ), BNP Paribas (OTC: BNPQY ), and Standard Chartered (OTC: SCBFF ). The latter reported a significant quarterly profit drop due to $900mn in China-related charges. This decline was further amplified by high bond yields and Middle East tensions, particularly the Israel-Gaza conflict that impacted crude prices and led to a fall in BP (NYSE: BP ) Plc and Shell (LON: SHEL )'s stock.
The market also reacted to corporate announcements such as Renishaw's profit warning and WPP's outlook cut. Amidst this, investors are keenly awaiting the European Central Bank's (ECB) rate decision in light of slowing inflation and growth.
Major indices including the pan-European STOXX 600 , German DAX , France's CAC 40, and the U.K.'s FTSE 100 experienced drops. The automotive sector also suffered with Mercedes-Benz (OTC: MBGAF ) predicting a squeeze on car sales margins leading to a slump in its shares, which subsequently caused BMW (ETR: BMWG ) and Renault (EPA: RENA ) stocks to decline.
However, it wasn't all negative news on Thursday. Aixtron saw its shares rise following a significant increase in Q3 net profit. Similarly, Danone and Carrefour (EPA: CARR ) experienced a boost following positive earnings news and robust Q3 sales respectively. Sodexo (EPA: EXHO ) also surged after announcing plans to list its voucher division in 2024.
On the other hand, HelloFresh (OTC: HLFFF ) and BNP Paribas fell after disappointing Q3 earnings. Unilever also tumbled after its CEO announced simplification plans.
In the global context, markets were under pressure on Thursday due to escalating worries. Investors are anxiously awaiting the ECB interest rate decision as well as crucial US data. Rising treasury yields are putting pressure on the Federal Reserve as it attempts to combat inflation without triggering a recession.
Middle East tensions escalated with Israeli Prime Minister Netanyahu warning about a potential Gaza ground invasion, leading to a rush towards safe-haven assets and pushing crude oil prices up more than two percent. The Israeli military confirmed an overnight raid into Gaza, raising concerns over Middle East oil supplies.
Tech giants Meta (NASDAQ: META ) and Alphabet (NASDAQ: GOOGL ) issued warnings for next year during the corporate reporting season, contributing to the market gloom. Texas Instruments (NASDAQ: TXN ) also issued bearish forecasts, and the market is keenly awaiting Amazon (NASDAQ: AMZN )'s upcoming report. Despite some hostages being released by Palestinian militants Hamas, causing a recent dip in oil prices, the ongoing conflict remains a concern for oil supplies.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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