By Steve Goldstein
European stocks struggled on Tuesday, as investors balanced generally stronger-than-expected third-quarter earnings results with worries about how rising coronavirus cases are leading to tougher restrictions on activity.
After a 1.8% tumble on Monday, the Stoxx Europe 600 (STOXX:XX:SXXP) dropped 0.7%, with decliners from apparel makers including LVMH Moët Hennessy (PAR:FR:MC) and from insurers including Allianz (ETR:XE:ALV) .
The French CAC 40 (PAR:FR:PX1) lost 1.5% as the German DAX (XEX:DX:DAX) and U.K. FTSE 100 (FTSE:UK:UKX) also lost ground.
Futures on the Dow Jones Industrial Average (DOW:DJIA) rose 8 points after a rough 650-point downturn on Monday for the blue chips (DOW:DJIA) .
German Chancellor Angela Merkel told her Christian Democratic Union party colleagues the coronavirus situation is threatening, according to published reports, as Italians protested on Monday night after strict measures were introduced there, including the 6 p.m. closures of bars and restaurants. In the Paris region, COVID-19 patients represent 67% of intensive care capacity.
“For the second time, Europe has turned into an epicenter of the COVID-19 pandemic. The partial curfews and other restrictions to contain the spread of the virus are casting a dark shadow over the near-term outlook,” said Holger Schmieding, chief economist at Berenberg Bank.
Third-quarter results have handily beaten analyst estimates on both sides of the Atlantic. Companies in the Stoxx 600 are expected to report a 28% drop in third-quarter earnings per share, compared with the 34% downturn expected at the end of June.
HSBC Holdings (LON:UK:HSBA) rallied 7%, as the U.K.-based, China-focused bank topped analyst estimates with a third-quarter profit of $2 billion. HSBC said it would decide next year on making a “conservative” dividend payment. Banco Santander (MCE:ES:SAN) gained 3% as the Spanish bank also topped estimates.
BP (LON:UK:BP) rose 2% as the oil giant’s adjusted profit topped estimates, though revenue was shy of expectations.
Capgemini (PAR:FR:CAP) climbed 4% as the IT consultant, pressured on Monday after SAP’s profit warning, reported stronger-than-forecast third-quarter revenue (ETR:XE:SAP) .