Europe close: Stocks slip as corporate earnings dampen sentiment

European stock markets were lower on Tuesday as risk appetite remains limited ahead of a number of key risk events in the coming days, while traders assessed a barrage of blue-chip corporate earnings and economic data.

The markets gave mixed reactions to quarterly results from heavyweights HSBC, Novartis, Banco Santander and BP, as investors also awaited earnings figures from a number of US giants this week – including five of the Magnificent Seven tech stocks.

Underlying concerns about the Middle East, nervousness ahead of the UK autumn budget on Wednesday and the US non-farm payrolls report on Friday, as well as ongoing uncertainty surrounding the US presidential elections next week, were all combining to keep a lid on gains in morning trade, according to analysts.

The Stoxx 600 was lower vt 0.57% at 517.99 with Germany's Dax off by 0.27% alongside to 19,478.07.

In economic news, the forward-looking GfK/NIM German consumer climate index for November rose by 2.7 points to -18.3 from October’s revised -21.0. This is the highest level since April 2022, although confidence remains low. "The uncertainty caused by crises, wars and rising prices is still very much present and is preventing factors that encourage consumption, e.g. the real income growth, from taking full effect," said Rolf Buerkl, consumer expert at NIM.

In the UK, shop prices were 0.8% lower in October than 12 months ago, compared with a 0.6% year-on-year fall in September, according to the BRC/NielsenIQ Shop Price Index. This was the third straight month of annual deflation and lowest rate of change since August 2021.

In other news, Swedish GDP contracted by 0.1% in the third quarter after a 0.3% decline in the second, meaning that the economy entered a technical recession, according to government statistics. Economists had pencilled in a 0.4% rebound.

Meanwhile, oil prices were partially rebounding after tanking more than 5% on Monday after airstrikes sent from Israel to Iran avoided oil and nuclear facilities, easing concerns of disruptions to supply. Brent crude was up 1.2% at $71.85 a barrel.

Blue chip earnings

HSBC rose 4% after announcing another $3bn share buyback as it posted better-than-expected third-quarter profits, underpinned by solid performances from the wealth and investment banking units. In the three months to the end of September, pre-tax profit rose 10% on the same period a year earlier to $8.5bn, versus analysts’ expectations of $7.6bn.

Other banks were also on the rise in Europe, including Deutsche Bank, Commerzbank, UniCredit and Standard Chartered.

However, Banco Santander dropped nearly 3% in Madrid after the news that it had delayed the release of its UK results – as it assess the impact of a landmark ruling on motor finance commissions that could cost hundreds of millions of euros – overshadowed a record third-quarter profit that beat forecasts.

Swiss pharma giant Novartis slumped despite lifting profit guidance for the third time this year following a forecast-beating third quarter. The company said annual core operating profit growth would be in the high-teens, compared with a previous estimate of mid- to high-teens growth. But shares dropped more than 3% as the market focused of mixed results for individual drug sales.

BP posted a slide in quarterly profits, hit by weaker refining margins, although the decline was not as steep as feared. However, shares fell with sentiment in the oil sector still weighed down by the sharp drop in the price of the commodity the previous day.