Commodity prices fears push European shares lower

On Tuesday European shares were negative as investors feared that increasing commodity prices would hinder a rebound in corporate profit, with new signals of further difficulties at property developer China Evergrande also hindering confidence.

The pan-European STOXX 600 index shed 0.3% in morning trading, moving around 5% below its August highest level. Asian stocks were also negative after Evergrande missed its third round of bond payments in three weeks.

Mining stocks lost some of Monday’s strong gains as an increase in commodity prices eased, while banks and automakers lost about 1%.

U.S. bank JPMorgan is set to kick off the earnings season on Wednesday. Its stock fell about 2% on Monday and the wider banking index shed 1.4%, after a recent rally to record levels on prospects of higher interest rates. In Europe, France’s LVMH will set the tone for luxury goods makers with its report later in the day.

Worries about surging energy prices and other supply chain limitations have overshadowed outlooks for the earnings season as a post-lockdown momentum in the global economy wanes and major central banks consider removing stimulus.

The STOXX 600 is nearly flat on the month, in percentage terms, after losing 3.4% in September.

Low-cost airline EasyJet dropped by 1.9% after it expected a loss of above 1 billion pounds for the 12 months ended September. Airbus lost 1.3% as the world’s largest planemaker’s deliveries were flat in September versus the previous month.

Freight forwarder DSV rose by 1.7% after it increased its earnings outlooks for the year, quoting fresh business activity in the third quarter and continued tight capacity in the market.

Automakers lost 1.0% as data showed auto sales in China - a major trading partner of Europe – dropped 19.6% in September as a persistent global shortage of semiconductors and a domestic power crunch disrupt production. Defensive sectors such as utilities and real estate were among the few gainers.