Europe midday: Shares extend losses as Evotec, Commerzbank disappoint

European shares extended losses by midday on Wednesday as investors digested the last raft of corporate earnings alongside the US mid-term election results after the predicted Republican “red wave” appeared to have fizzled out.

The pan-regional Stoxx 600 index was down 0.38% at 1134 GMT with all major bourses lower. As votes continued to be counted it appeared that the right-wing Republican Party had taken control of the House of Representatives, with the Senate still up for grabs.

However, the expected rout of the Democrats by Republican candidates still peddling the Donald Trump lie that the 2020 presidential election result was “stolen” by Joe Biden, had not materialised.

Amid all the political discussion, and impact on whether the Biden administration can now get any legislation through Congress in the next two years, investors are still nervously awaiting key inflation numbers tomorrow and what it means for the pace of policy tightening over the next few months.

"As the US midterm election results slowly drift in, it looks like the Democrats are doing better than expected, holding onto some key Senate seats with President Joe Biden avoiding an embarrassing Republican sweep," said Interactive Investor head of investment Victoria Scholar.

"The Republicans are still likely to take control of the House while the battle for US Congress could go either way. The better-than-expected Democratic results so far are putting mild pressure on the dollar, which is trading modestly lower against the euro, the pound and the Japanese yen."

Stocks in Asia slid as China producer prices fell for the first time in almost two years, reflecting weakening demand, zero-tolerance Covid policies and a sliding property market. The producer price index fell 1.3% year-on-year, following a 0.9% gain in September, the National Bureau of Statistics said.

Consumer price inflation slowed to 2.1% from a 29-month high of 2.8% in September, mainly driven by falling food prices.

In equity news, shares in UK commercial TV broadcaster ITV fell as it warned of lower advertising sales for the full year.

Smiths Group rose on upbeat earnings ahead of expectations.

German pharma company Evotec slumped after posting a loss in the third-quarter, while UK retailer Marks & Spencer was down after a profits fall and warning of weakening demand in the year ahead.

Commerzbank shares slumped as investors were unimpressed with the German lender's forecasts and reported a large charge on its Polish operations for the third quarter.

Reporting by Frank Prenesti for Sharecast.com