Europe midday: Stocks pull back amid macro uncertainty
European stock markets were falling sharply on Tuesday as investors scaled back risk appetite and took profits with markets retreating from recent records.
By 1225 CEST, the Stoxx 600 was down 0.7% at 517.75, with losses of between 0.7% and 1.2% across London, Paris, Milan and Madrid, while Frankfurt's DAX fell just 0.2%, propped up by big gains from tech heavyweight SAP.
The Stoxx 600 was falling for the second straight day since hitting a four-week high of 524.99 on Friday – its highest level since reaching an all-time closing high of 528.08 on 27 September.
The negative start follows a weak finish on Asian markets overnight and a mixed close on Wall Street as US bond yields rose. Treasuries were falling on the back of comments from several Federal Reserve policymakers who called for more gradual rate cuts, tempering expectations of more aggressive monetary easing over the coming months.
"A mixed start in Europe follows on from similarly unconvincing sessions in both the US and Asia. As we stand just two-weeks out from the US election, the rising US treasury yields and dollar highlight why we are starting to see a degree of caution come into play," said Joshua Mahony, chief market analyst at Scope Markets.
Stock futures on Wall Street were falling further ahead of the opening bell as investors awaited a flurry of corporate earnings from blue chips GE Aerospace, 3M, Verizon, Lockheed Martin and RTX.
Back in Europe, UK government borrowing rose £2.1bn last month to £16.1bn, marking the third-highest September figure since monthly records began in January 1993, according to data from the Office for National Statistics. The figure was higher than the Office for Budget Responsibility’s forecast of £15.1bn but below the consensus forecast of £17.4bn.
Also on Tuesday, investors will also be keeping a close eye on the International Monetary Fund and World Bank's annual meetings in Washington D.C, where the heads of the Bank of England and European Central Bank are due to speak. While both are unlikely to reveal anything new, outlook statements regarding inflation and economic growth will be watched closely for indications about how monetary policy may pan out before the end of the year.
SAP, Logitech and Saab outperform
SAP was also a high riser after the German software giant upped its full-year sales and profit targets after cloud revenue surged 27% in the third quarter. The company guided to an annual operating profit of €8bn, up €200m on previous guidance.
Swedish aerospace and defence group Saab AB jumped after saying that full-year sales would hit the top end of guidance after third-quarter bookings surged 41%. Chief executive Micael Johansson said the company is seeing "increasing demand as European nations need to replenish their defense stocks".
HSBC was trading flat after announcing the appointment of its new chief financial officer, as well as a number of key structural changes aimed at enhancing strategic execution and leadership. HSBC said it would streamline its operations by reorganising into four core business units – Hong Kong, UK, Corporate and Institutional Banking, and International Wealth and Premier Banking – designed to reduce duplication and improve agility.
Hotels group IHG declined after reporting a slowdown in RevPAR growth in its third quarter as conditions in China worsened. RevPAR was up just 1.5% in the three months to September, down from 3.2% in the second quarter, missing the 2.1% consensus estimate.