European Stock Gains Collapse to Usher In Fourth Day of LossesBy and
Ocado slumps after saying it sees margin pressure continuing
Stoxx 600 reversed earlier advance in afternoon trading
An early advance in European stocks evaporated as declines in miners and energy producers helped extend the lowest level for equities in more than a month.
Total SA and Royal Dutch Shell Plc lost at least 2.6 percent, following crude lower. Anglo Commodity producers fell for a fourth day, their longest losing stretch since June. Ocado Group Plc plunged 14 percent after the online grocer said it sees no respite from sustained margin pressure in the short term.
The Stoxx Europe 600 Index slipped 1 percent at the close, reversing a gain of as much as 0.6 percent after U.S. markets opened. The benchmark capped its biggest four-day slump in two months, down 3.4 percent, as investors fret central banks may be less willing to use monetary policy to stimulate growth. Economic data have been started missing forecasts again this month, according to a Citigroup Inc. index.
“Valuations don’t feel demanding, but for markets to move higher from here you need better economic data or earnings pickup,” said William Hobbs, head of investment strategy at Barclays Plc’s wealth-management unit in London. “The recovery after February bottoming was down to excessive pessimism priced in at that point and the unwinding of that pessimism rather than a fundamental change in the backdrop. Muted economic growth is still the order of the day.”
European stocks rallied as much as much as 16 percent from a February low, recovering from Brexit-induced losses to reach a four-month high last week. After the losing streak culminating today, the Stoxx 600 is trading at 14.7 times estimated earnings, near its lowest valuation in two months.
Mixed comments from Federal Reserve officials in recent days left investors speculating on whether they will raise interest rates at their next meeting, just as the European Central Bank downplayed the need for more stimulus. Traders are pricing in a 22 percent probability of a U.S. rate hike on Sept. 21.
In a broad-based decline, almost all Stoxx 600 industry groups and western-European markets fell on Tuesday. Equity gauges of Spain, Italy and Portugal dropped the most, down more than 1.6 percent. Banco Santander SA, UniCredit SpA and Banco Comercial Portugues SA slid more than 2.7 percent as Europe’s lenders posted their biggest two-day slump in more than a month.
Among other shares active on corporate news, Linde AG climbed 4.6 percent as it announced the departure of its top two executives following the collapse of its planned merger with Praxair Inc. The German industrial-gas company slumped the most in nine months yesterday in the wake of the deal’s failure.
Partners Group Holding AG climbed 8.4 percent after posting a jump in first-half earnings. Air Liquide SA gained 4.8 percent after saying it’s starting a 3.3 billion euro ($3.7 billion) rights issue to help finance its takeover of Airgas Inc.
JD Sports Fashion Plc added 5 percent after reporting higher profit in the first six months of the year and saying second-half trading so far is “encouraging.”