European stocks slipped again on Friday, following their weakest day in six weeks, as downgrades to growth forecasts weighed and bleak numbers from Umicore SA, Skanska AB, and Rockwool International A/S outweighed a sales beat at L’Oreal SA.
The pan-European STOXX 600 slipped 0.6 percent to close at 358.07 points, with most of the action at the level of individual stocks. The index posted its worst week in six, down 0.5 percent.
Markets were hit on Thursday by US President Donald Trump saying that he did not plan to meet Chinese President Xi Jinping (習近平) before a March 1 deadline to achieve a trade deal.
Growth worries in Europe also spiked after the European Commission downgraded its growth forecasts.
“The trade issue is more in focus in the short term. Macro data over the last few weeks hasn’t given any reason to be more concerned about a recession than a month or two ago,” said Paul Harper, equity strategist at DNB ASA.
“The cycle is pretty mature now, but it’s always pretty difficult to know how close to a recession you are when indications are not showing signs that it’s around the corner,” he added.
French cosmetics giant L’Oreal said that strong demand for luxury skin creams helped it beat fourth-quarter sales forecasts — another company reporting better-than-feared demand from China after LVMH Moet Hennessy Louis Vuitton SE last week.
“L’Oreal is capitalizing on very strong skin care growth, booming luxury markets, strong demand in travel retail channels and the shift to online,” Liberum analysts wrote.
Its shares rose 1.2 percent in early deals before giving back gains to trade up just 0.4 percent.
Traders put the move down to profit-taking after a strong run — L’Oreal hit a record high on Tuesday.
Luxury handbag maker Hermes International SCA gained 0.7 percent after it also said sales momentum in its Chinese stores stayed strong.
Swedish electronics group Dometic Group shone, topping the STOXX with a 13 percent jump after reporting fourth-quarter profit rose and giving a positive outlook for sales growth this year.
On the flip side, Belgian chemicals and cobalt refiner Umicore fell 4.8 percent after saying it expected growth this year to be hit by subdued demand in cars and consumer electronics, and research and development costs.
The company’s lack of quantitative guidance for this year weighed on sentiment, analysts said.
Construction was a weak spot with Denmark’s Rockwool sinking 12 percent after full-year earnings missed expectations, and Sweden’s Skanska losing 7.8 percent after it cut its dividend and lagged profit estimates.
Autos fell 0.3 percent, extending losses from Thursday, when the sector suffered its biggest one-day drop since the Brexit vote aftermath in June 2016.
Tata Motors Ltd said that Jaguar Land Rover Automotive PLC would swing to a loss due to weak sales, and that latest negative news on car demand weighed on auto suppliers Valeo Group and Faurecia Group, down 2.6 to 3 percent.
Adding to the negativity around autos, German car wiring supplier Leoni AG sank 25 percent after delivering a significant miss to fourth-quarter earnings expectations.
Swiss business services company Diethelm Keller Siber Hegner Holding Ltd fell 4.4 percent, extending Thursday’s losses after it reported earnings down 11 percent, lagging estimates.
Overall, Europe was on track for its weakest quarter for earnings growth in three years, but investors have been more forgiving to companies with valuations low and expectations at rock bottom.
“The question now is what can provide the catalyst for another leg up from here,” Harper said. “At the moment earnings revisions are not particularly encouraging.”
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