Weak Earnings Cause European Stocks to Drop as Pound Declines – Europe Market Wrap

European markets sank after disappointing profits from the luxury sector compounded concerns about the semiconductor industry’s profit forecast. The Pound fell as a decline in UK inflation prompted increasing betting on interest rate reduction.

The Stoxx 600 index fell 0.3% after chipmaker ASML extended its profit warning on Tuesday. LVMH and Salvatore Ferragamo led the decline in luxury stocks following disappointing earnings, falling as much as 7%. US equities futures were largely unchanged.

In commodities, oil remained near $74 per barrel after falling on Tuesday, as traders watched the danger of escalation in the Middle East and the forecast for the coming year. Gold soared to a new record high as investors focused on the forthcoming US election, with polls predicting a razor-thin race with less than three weeks to go.

Sterling fell 0.6% to $1.299, its lowest since August 20th. According to figures released Wednesday, consumer prices grew 1.7% in September compared to the previous year, less than economists had predicted. The FTSE 100 outperformed European indices, while UK gilts declined, as the data encouraged investors to gamble on more aggressive easing by the BoE.

The Yen traded around $149 as BoJ’s Adachi emphasised the importance of gradually boosting the benchmark interest rate.