(Bloomberg) — European stocks traded steady as easing geopolitical concerns in the Middle East lifted sentiment, while slumping oil prices weighed on the energy sector.
The Stoxx Europe 600 Index paired earlier gains and was largely flat as of 10:15 a.m. in London as energy stocks retreated. Airlines rallied as the cost of fuel fell.
Crude tumbled more than 6% and gold edged lower after Iran said its oil industry was operating normally following Israel’s attacks on military targets across the country in retaliation for a missile barrage earlier this month.
“The limited response from Israel has raised hopes that the conflict will not escalate further,” said Mohit Kumar, chief strategist and economist for Europe at Jefferies.
Equities in Europe are set for a small retreat in October as risks including the UK budget and the US presidential election keep traders cautious. Sectors most exposed to China’s economy, such as luxury stocks and miners, have come under particular pressure as investors assess the outlook for the country’s push to revive its stalling economy.
There are positive factors too. Earnings beats have come in above average in both the US and Europe so far, according to Barclays strategists.
“We still have a medium term bullish bias for risky assets, but are taking some profits leading up to the elections,” Kumar says. He added that any pullback in risky assets is a buying opportunity.
Markets are also readying for a barrage of data this week including Chinese economic activity readings, Eurozone and US growth prints as well as a payrolls report.
Among single stocks, Royal Philips NV fell the most in 26 years after the medical technology firm slashed its annual sales-growth forecast on tepid demand in China. Computacenter Plc dipped 2.1% as the company warned it saw a softer end to the third quarter than hoped and that annual adjusted pretax profits will be modestly lower than the year before.
Sonova Holding AG was the best-performing stock in terms of points on the wider benchmark as Costco said it’s bringing specific hearing aids from the company back into its product range.
For more on equity markets:
- Equities Relying on Growth Are Tipped for Rebound: Taking Stock
- M&A Watch Europe: Grifols, EQT, BT, Anglo American, JCDecaux
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