Earnings push European markets lower

European shares slipped on Tuesday as disappointing earnings reports from Diageo and Bayer took the shine off a jump in growth-linked cyclical stocks, while investors awaited signs of progress on more U.S. fiscal stimulus.

The world’s largest spirits maker, Diageo Plc, slid 6.3% as it reported a bigger-thanexpected decline in underlying net sales across all markets except North America, bucking a trend which has seen alcohol producers propped up by supermarket sales during lockdowns.

German drugs and pesticides group Bayer also fell 3.6% as moves to settle lawsuits over its Roundup weedkiller helped drive a 9.5 billion euro loss. Energy major BP by contrast jumped 7% as it used results to bring forward plans to speed its reinvention as a lower carbon company, funded in part by $25 billion in asset sales by 2025.

Oil & gas led gains among industrial sectors with a 2.4% rise, while automakers and banks .SX7P rose between 1.5% and 2%. The pan-European STOXX 600 slipped 0.2% overall, with UK and German stocks both down.

After a stunning recovery since March lows that has seen the STOXX 600 climb nearly 36%, European stocks have wobbled in recent weeks on concerns about a resurgence in coronavirus cases.

Doubts over the progress of a U.S. coronavirus aid package and a diplomatic tussle over Chinese tech companies’ operations in the United States also kept investors on edge. Banking-heavy Italian and Spanish indexes were both higher, as data showed Italy standing out as the main beneficiary of the European Central Bank’s efforts to support a virusstricken euro zone economy.

Of the 57% of companies listed on the STOXX 600 that have reported so far, nearly 62% have topped analysts’ much-reduced expectations for results, according to Refinitiv data.

Chipmaker Infineon jumped 4.7% after its CEO Reinhard Ploss signalled “concrete signs of recovery within the automotive sector”. Hugo Boss gained 2.8% as it said it had returned to strong growth in China in June and saw online sales jump 74% in the second quarter.

This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.