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July 29, 2020, 9:51 a.m. EDT

European stocks struggle amid earnings rush and as Fed decision looms

Deutsche Bank, Santander, Barclays among stocks on the move

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By Barbara Kollmeyer, MarketWatch


Getty Images
The headquarters of Deutsche Bank stands on March 19, 2020 in Frankfurt, Germany.

European stocks struggled for gains on Wednesday, as investors fielded a flood of earnings from banks such as Barclays PLC and Deutsche Bank AG, and waited for a Federal Reserve announcement due later.

The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.52% slipped 0.2% to 367 after gaining 0.4% on Tuesday. The German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.35% fell 0.2% and the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.51%  was flat, while the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.23%  rose 0.5%, boosted by well-received results from heavyweight Schneider Electric SE.

But gains were hard to come by as company results globally have confirmed the tough climate caused by the pandemic. The yield on 10-year German bonds /zigman2/quotes/211347112/realtime BX:TMBMKDE-10Y -3.31%  hit minus 0.5% on Wednesday, a level not seen in two months. The yield on 10-year gilts /zigman2/quotes/211347177/realtime BX:TMBMKGB-10Y -9.81%  hit the lowest since March at -0.135%.

Investors are waiting on the outcome of a two-day Federal Reserve meeting — the decision won’t come until after the close of European markets. While no major policy changes are expected, Fed Chairman Jerome Powell is expected to maintain the central bank’s dovish position. As well, progress on a second coronavirus aid package out of the U.S. is being closely monitored.

“For all the optimism about a new U.S. stimulus program, the rising hopes of a vaccine, and the likelihood of central banks keeping monetary policy extraordinarily loose, the resurgence of coronavirus cases that are starting to get reported across the world is prompting the realization that hopes of a V-shaped recovery is starting to look like pie in the sky,” said Michael Hewson, chief market analyst at CMC Markets, in a note to clients.

While cases may be starting to plateau in some of the hardest hit U.S. states, some 21 are considered hot spots, the New York Times reported. That’s as parts of Asia and Europe are grappling with a potential second wave of the virus, with outbreaks in parts of Spain and Belgium. The U.K. over the weekend recommended against all but essential travel to Spain, throwing the struggling travel industry into uproar.

Several big banks reported results on Wednesday, with the economic fallout from the coronavirus forcing those institutions to book major charges.

Shares of Barclays PLC /zigman2/quotes/210134173/delayed CH:BARC +4.33%   /zigman2/quotes/208409333/delayed UK:BARC -0.77%  slid 5% after reporting said pretax profit more than halved in the first half of 2020 as the lender booked a £3.74 billion ($4.8 billion) credit impairment charge. Barclays also warned of a challenging second half.

Shares of Banco Santander SA /zigman2/quotes/202859081/composite SAN -3.14%   /zigman2/quotes/205677933/delayed ES:SAN -3.81%  also fell 5% after the Spanish lender reported a surprise massive loss in the second quarter, weighed by a 12.6 billion euros ($14.76 billion) impairment stemming from the pandemic’s economic hit.

Shares of Deutsche Bank AG /zigman2/quotes/203042512/composite DB -2.19%   /zigman2/quotes/205584254/delayed DE:DBK -2.90%  fell nearly 5%. The German bank posted a second-quarter loss, but higher revenue on a strong performance by its investment bank unit, though bad-loan provisions reached the highest level in more than a decade.

Shares of Schneider Electric SE /zigman2/quotes/200216351/delayed FR:SU +2.06%  climbed 3% after the French energy-management group /zigman2/quotes/200216351/delayed FR:SU +2.06%  reported a fall in first half net profit, but re-established full-year targets and its share buyback program.

Tullow Oil PLC /zigman2/quotes/205079109/delayed UK:TLW -6.11%  shares plunged 5% after the U.K. oil producer said that it expects to report lower revenue and forecast pretax impairments of between $1.4 billion and $1.7 billion.

/zigman2/quotes/210599654/delayed
XX : STOXX
361.49
-1.90 -0.52%
Volume: 0.00
Sept. 29, 2020 5:50p
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/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
12,825.82
-45.05 -0.35%
Volume: 49,842
Sept. 29, 2020 6:30p
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
5,897.50
-30.43 -0.51%
Volume: 664,696
Sept. 29, 2020 4:58p
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/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
4,832.07
-11.20 -0.23%
Volume: 73,788
Sept. 29, 2020 6:05p
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/zigman2/quotes/211347112/realtime
add Add to watchlist BX:TMBMKDE-10Y
BX : Tullett Prebon
-0.54
-0.02 -3.31%
Volume: 0.00
Sept. 29, 2020 6:02p
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/zigman2/quotes/211347177/realtime
add Add to watchlist BX:TMBMKGB-10Y
BX : Tullett Prebon
0.18
-0.02 -9.81%
Volume: 0.00
Sept. 29, 2020 5:01p
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/zigman2/quotes/210134173/delayed
CH : Switzerland: SWX
CHF 1.81
+0.08 +4.33%
Volume: 0.00
April 1, 2020 5:55a
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
CHF22.36 billion
Rev. per Employee
CHF448,513
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/zigman2/quotes/208409333/delayed
UK : U.K.: London
97.25 p
-0.75 -0.77%
Volume: 37.26M
Sept. 29, 2020 4:35p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
£16.99 billion
Rev. per Employee
N/A
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/zigman2/quotes/202859081/composite
US : U.S.: NYSE
$ 1.85
-0.06 -3.14%
Volume: 6.00M
Sept. 29, 2020 1:47p
P/E Ratio
N/A
Dividend Yield
4.48%
Market Cap
$32.01 billion
Rev. per Employee
$442,125
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/zigman2/quotes/205677933/delayed
ES : Spain: Madrid
1.59
-0.06 -3.81%
Volume: 49.55M
Sept. 29, 2020 5:38p
P/E Ratio
N/A
Dividend Yield
5.09%
Market Cap
€27.49 billion
Rev. per Employee
€374,762
loading...
/zigman2/quotes/203042512/composite
US : U.S.: NYSE
$ 8.25
-0.19 -2.19%
Volume: 2.69M
Sept. 29, 2020 1:47p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$17.42 billion
Rev. per Employee
$493,032
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/zigman2/quotes/205584254/delayed
DE : Germany: Frankfurt
7.04
-0.21 -2.90%
Volume: 42,825
Sept. 29, 2020 7:24p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€417,912
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/zigman2/quotes/200216351/delayed
FR : France: Euronext Paris
108.90
+2.20 +2.06%
Volume: 1.20M
Sept. 29, 2020 5:35p
P/E Ratio
27.65
Dividend Yield
2.34%
Market Cap
€57.19 billion
Rev. per Employee
€181,836
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/zigman2/quotes/200216351/delayed
FR : France: Euronext Paris
108.90
+2.20 +2.06%
Volume: 1.20M
Sept. 29, 2020 5:35p
P/E Ratio
27.65
Dividend Yield
2.34%
Market Cap
€57.19 billion
Rev. per Employee
€181,836
loading...
/zigman2/quotes/205079109/delayed
UK : U.K.: London
15.28 p
-1.00 -6.11%
Volume: 8.09M
Sept. 29, 2020 4:35p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
£229.78 million
Rev. per Employee
N/A
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Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.

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