Europe close: Stocks finish lower, Lloyds and Deutsche Bank underwhelm
Europe's stock markets mostly fell on Wednesday as macro uncertainty and cautious comments from the head of the European Central Bank weighed on risk appetite.
The Stoxx 600 finished down 0.3% at 518.84, with every major index except Madrid's Ibex 35 closing lower. The Stoxx 600 fell for the third straight day since hitting a four-week high of 524.99 on Friday – its highest close since reaching a record of 528.08 on 27 September.
In the absence of any major economic data, speeches from the heads of Bank of England and European Central Bank were closely watched at the annual meetings of the IMF and World Bank taking place in Washington DC.
ECB president Christine Lagarde said "we need to be cautious" regarding any future rate cuts, saying that any decisions would be mainly based on incoming economic data. “Of course there will be a judgmental aspect to our decisions,” she said.
US stocks also declined after the opening bell on Wall Street, with analysts pinning the downbeat mood to uncertainty surrounding the upcoming elections, with the latest polls showing that former president Donald Trump is leading in the majority of swing states.
“With so little between the two US presidential hopefuls it’s no surprise that this earnings season isn’t being met with the same sense of joie de vivre as the one in the summer,” says Danni Hewson, AJ Bell's head of financial analysis. “Markets don’t like unpredictability and the US election will have huge global ramifications, so a little caution is understandable.”
Volatility in the commodities markets was also in focus on Wednesday. Brent crude was down 1.4% at $74.95 a barrel having jumped by 2% the previous session as oil traders continue to react to the latest newsflow from the Middle East. Meanwhile, gold prices were finally pulling back from their recent record highs, with futures down 0.9% at $2,734.30 an ounce. Bullion has now increased by more than 5% over the past two weeks despite the relative strength of the US dollar.
Lloyds and Deutsche Bank fall
After an earlier rise, Lloyds finished in the red despite the UK banking group beating consensus forecasts with its third-quarter earnings and reiterating guidance for the full year. Statutory profit before tax totalled £1.82bn in the three months to 30 September, down 2% on last year but well ahead of the £1.6bn expected by analysts due to lower-than-expected impairment charges.
German peer Deutsche Bank also fell despite returning to profitability in the third quarter with a net profit of €1.46bn, surpassing analyst expectations of €1.05bn. Revenue for the quarter reached €7.5bn, exceeding forecasts for €7.34bn, with notable performance in its investment banking division.
Danish Brewer Carlsberg declined after the news that its £3.3bn takeover of Britvic is being formally investigated by UK competition regulators.
AkzoNobel, the Dutch maker of paints, coatings, and chemicals, fell sharply after underwhelming with third-quarter results as organic sales rose just 1% and revenues fell 3%.