Europe midday: Shares fall on weak Germany EZ data; Scor tanks on warning

European shares were lower on Tuesday as investors digested dovish remarks from US Federal Reserve chair Jerome Powell on interest rates, while shares in Scor tanked by a quarter as the French reinsurer issued a profit warning at its life & health business.

The pan-European Stoxx 600 index was down 0.45% to 516. US shares were boosted overnight when Powell said the Fed would not wait until inflation hits 2% to cut interest rates.

“If you wait until inflation gets all the way down to 2%, you’ve probably waited too long,” he said Monday.

In economic news, the economic outlook in Germany deteriorated in July for the first time in a year, according to a survey released by the ZEW Center for European Economic Research in Mannheim.

The headline investor expectations index fell 5.7 points from June to 41.8, coming in below expectations for a reading of 42.3. Meanwhile, the current conditions index improved by 4.9 points to -68.9 points in July.

There was also downbeat news from the eurozone where the bloc's trade surplus unexpectedly shrank in May, falling to its lowest level in four months, according to figures released by Eurostat.

The single-currency region saw a trade balance of €13.9bn in May, following a downwardly revised €14.2bn surplus in April (initial estimate: €15bn).

This was the lowest level since January and well below the €17.1bn surplus expected by economists. Nevertheless, it compared with a trade deficit of €0.4bn in May 2023.

"European markets are losing traction once again today, with equities remaining under pressure after yesterday’s session that saw Chinese economic data highlight the ongoing demand issues from the world’s largest economy," said Scope Markets analyst Joshua Mahony.

He noted that the eurozone trade balance figure "came in well short of expectations" with the surplus driven primarily by "weak imports rather than export strength".

"With the ECB interest rate decision due on Thursday, traders will likely hope that this fresh source of economic weakness could further enhance the chance of a rate cut in September."

In equity news, shares in Hugo Boss plunged as the German fashion house cut its sales outlook, citing “persistent macroeconomic and geopolitical challenges”.

UK online grocer and technology group Ocado surged more than 15% after reporting a lower first half loss and raising full-year guidance.

Currency transfer specialist Wise was up after reporting higher customer numbers and volumes along with a reduction in fees.

Reporting by Frank Prenesti for Sharecast.com