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Europe shares drop following Fed decision, mixed earnings

written by Bella Palmer

The pan-European STOXX 600 dropped 0.2% after logging its first monthly decline this year in April

European shares dropped marginally in their first May trading session on Thursday as investors returned from a mid-week holiday to gauge a string of earnings after the Fed indicated a delay in U.S. interest rate cuts.

The pan-European STOXX 600 dropped 0.2% after logging its first monthly decline this year in April.

Market sentiment has cooled as investors navigate risks around the Middle East conflict, the European Central Bank's policy outlook beyond June, and the corporate earnings season.

European equities were shut due to the Labour Day holiday on Wednesday, a day that saw the U.S. Federal Reserve indicate rates would stay higher for longer owing to recent disappointing inflation figures.

Powell noted the uncertain path forward for U.S. inflation, our base case remains that inflation and economic growth will cool off, allowing the Fed to begin cutting rates in September, UBS analysts stated in a note.

On the earnings front, Danish drugmaker Novo Nordisk raised its 2024 outlook as it races to boost output of its Wegovy weight-loss treatment. But competition from rival Eli Lilly compelled the firm to cut prices of the drug, knocking its shares around 3% lower.

The drugmaker weighed on Copenhagen's OMX 20 index while the broader healthcare sector shed 0.7%.

Netherlands' ING Groep added 6.4% after announcing a €2.5-billion ($2.68 billion) share buyback and a strong Q1 performance, while Britain's Standard Chartered climbed 8.8% after a Q1 profit beat, putting the banking index among top gaining sectors.

Hugo Boss was the STOXX's biggest decliner, down around 10% after the brand flagged weaker demand in China and concern about U.S. consumer sentiment ahead of the presidential election.

Of the 136 firms on the STOXX 600 to have reported earnings to date, 58.8% have surpassed analyst estimates, compared with a long term average of 54%, as per weekly LSEG data released Tuesday.


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