European stocks fall as luxury stocks feel pain from China's woes
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[October 18, 2021] By
Anisha Sircar and Sruthi Shankar
(Reuters) -European shares fell on Monday
after weaker-than-expected growth data from China hit luxury stocks,
while a relentless surge in commodity prices fuelled worries about
inflation spiralling out of control.
The pan-European STOXX 600 index fell 0.5% after an upbeat start to the
quarterly earnings season drove its strongest weekly performance since
March on Friday.
Asian stocks came under pressure after data showed China's economy hit
its slowest pace of growth in a year in the third quarter, hurt by power
shortages, supply chain bottlenecks and major wobbles in the property
market.
China-exposed luxury stocks including LVMH, Kering and Hermes fell about
3% each, also hurt by Chinese President Xi Jinping's call for the
expansion of a consumption tax.
"(Sentiment) is being driven by some of the data out of China," said
Michael Bell, global market strategist at JP Morgan Asset Management.
"It's ongoing concerns around the slowdown in the real estate market
really."
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Belgian materials technology and recycling group Umicore was among major
laggards, falling 5.5% after it cut its profit outlook to reflect a
stronger than previously expected impact from the global semiconductor
shortage.
Analysts are expecting European companies to report a near 47% jump in
third-quarter profit, as per Refinitiv IBES data. Those figures have
been revised higher in recent days, helping the STOXX 600 inch toward
its August peak.
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The German share price index DAX graph is pictured at the stock
exchange in Frankfurt, Germany, October 8, 2021. REUTERS/Staff
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"When we look at the outlook in the next 12 months, valuations may come down a
little bit, but not enough to offset the move higher that we see in earnings,
and that should be pretty positive," JPMorgan's Bell said.
European miners as well as oil and gas stocks were among the few gainers as
crude futures rose past $85 a barrel and metal prices rallied. [O/R] [MET/L] [IRONORE/]
The Hut Group rose 5.5% after the British online retailer backed by SoftBank
said it would remove its founder's "golden share" and seek a premium listing
after its shares plummeted last week.
French biotech company Valneva shot up 32.3% after it reported positive results
from a late-stage trial for its inactivated, adjuvanted COVID-19 vaccine
candidate.
(Reporting by Anisha Sircar and Sruthi Shankar in Bengaluru; Editing by
Subhranshu Sahu and Anil D'Silva)
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