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Real estate firms lead declines
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SBB extends declines after dividend payment delay
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Grifols top STOXX 600 gainer, lifts 2023 margin outlook
(Updates prices to close, replaces analyst comment, changes
stock movers)
By Amruta Khandekar and Ankika Biswas
May 9 (Reuters) - European shares fell on Tuesday after
a slew of weak corporate earnings soured sentiment, while
investors keenly awaited crucial U.S. economic data for more
clarity on the Federal Reserve's monetary policy plans.
The pan-European STOXX 600 index closed 0.3% lower.
SBB fell 24.2%, extending its slide to a five-year low after the Swedish real estate company said on Monday it would halt dividend payments and scrap a planned share issue in the wake of a credit rating cut. The move, coupled with declines of between 3.4% and 5.3% in peers Castellum , Wallenstam and Fabege , saw Europe's real estate sector take the worst blow, down 2.9%. The benchmark STOXX 600 index has been resilient with a 9.4% gain year-to-date, but has come under pressure recently after the European Central Bank remained steadfast in its commitment to taming price pressures as investors await U.S. inflation data. Policymaker Peter Kazimir noted that the ECB may need to raise interest rates for longer than anticipated, and September could be the earliest moment to judge whether policy tightening so far had been effective. Readings on U.S. consumer and producer prices, later this week, will be assessed for any signs that inflation has cooled enough for the Fed to consider easing policy tightening soon.
"If inflation turns out to be higher, that would lead to
market participants repricing the possibility of rate cuts from
the Fed later this year and result in more dollar
strengthening," said Teeuwe Mevissen, senior macro strategist at
Rabobank.
Investors also awaited an update on the U.S. debt ceiling
from a meeting between President Joe Biden and top Republican
lawmakers later in the day, with an unprecedented default
looming in three weeks if no deal is struck.
Further, China-exposed luxury firms such as Hermes
International SCA , Pernod Ricard SA and
Kering SA fell between 0.9% and 2.7% after weak data
on the country's imports and exports.
Among others, Direct Line Insurance Group Plc lost
4.6% as the British insurer said it expected earnings to be
pressured in 2023.
Most European bourses edged lower, while London's FTSE 100 shed 0.2% after a long weekend.
Meanwhile, helping cut losses in the STOXX 600 was an 8.7%
jump in German dialysis specialist Fresenius Medical Care on better-than-feared first-quarter earnings.
Grifols soared 9.4%, the top STOXX 600 gainer,
after the Spanish drugmaker lifted its 2023 margin outlook,
while Italy's third-largest bank Banco BPM climbed
7.6% after raising its profit targets.
Of the STOXX 600 companies that have reported first-quarter
earnings so far, 66.3% have beaten estimates, Refinitiv data
showed, versus the typical rate of 53%.
(Reporting by Amruta Khandekar and Ankika Biswas; Editing by
Sonia Cheema and Alex Richardson)
