European Stocks Slip as Earnings and Rates Outlook Take Center Stage
European stocks declined on Tuesday as investors weighed corporate earnings and the outlook for interest rates. The Stoxx Europe 600 Index fell 0.3%, with banks and automakers leading the losses.
Earnings Season in Full Swing
The earnings season is in full swing in Europe, with companies from the banking, energy, and retail sectors reporting their results. Investors are closely watching the reports for signs of how the region’s economy is faring.
In the banking sector, UBS Group AG reported a first-quarter profit that beat analysts’ estimates. The Swiss bank said its net income rose to 1.4 billion Swiss francs ($1.5 billion) from 1.2 billion francs a year earlier.
Meanwhile, in the energy sector, Royal Dutch Shell Plc reported a first-quarter profit that was slightly below expectations. The oil giant said its net income fell to $3.3 billion from $4.1 billion a year earlier.
Central Bank Policy in Focus
Investors are also keeping a close eye on central bank policy. The European Central Bank is expected to keep its benchmark interest rate unchanged at its meeting later this week.
The ECB is expected to maintain its accommodative stance, as the region’s economy continues to recover from the pandemic. The central bank is also expected to provide more details on its bond-buying program.
Markets React to U.S. Data
Markets were also reacting to U.S. economic data. The U.S. Commerce Department reported that retail sales rose by 9.8% in March, the biggest monthly gain since May 2020.
The data was seen as a sign that the U.S. economy is continuing to recover from the pandemic. The U.S. Federal Reserve is expected to keep its benchmark interest rate unchanged at its meeting later this week.
Sectors Move in Opposite Directions
In Europe, the banking sector was the biggest loser, with shares of UBS and Deutsche Bank AG both falling more than 1%. Automakers were also lower, with shares of Volkswagen AG and BMW AG both down more than 1%.
On the other hand, the energy sector was the biggest gainer, with shares of Royal Dutch Shell and BP Plc both rising more than 1%. The retail sector was also higher, with shares of Carrefour SA and Tesco Plc both up more than 1%.
Outlook
Looking ahead, investors will be closely watching the ECB’s meeting later this week for clues on the central bank’s policy outlook. They will also be keeping an eye on U.S. economic data for signs of the recovery in the world’s largest economy.
Overall, European stocks are likely to remain volatile in the near term as investors weigh corporate earnings and the outlook for interest rates.