European Stocks Dragged Down by Novartis, BP Disappointments

(Bloomberg) -- European equities dipped on Tuesday as earnings from heavyweights BP Plc and Novartis AG failed to live up to expectations, while growing market risks kept moves in check in what is shaping up to be a key week for stocks.

The Stoxx Europe Stoxx Index gave up earlier gains to trade 0.2% lower by 13:30 p.m. London time, with travel and leisure stocks, retailers and industrials among the biggest fallers.

Earnings prompted some of the biggest moves, with Novartis the single biggest drag on the benchmark after the pharmaceuticals maker posted disappointing sales growth for some of its key drugs. BP also weighed, with the oil major dropping as it saw a rise in net debt.

Banks were a bright spot, boosted by a rise in HSBC Holdings Plc’s shares after the lender announced a $3 billion stock buyback as its profit beat estimates. Santander Bank Polska SA was another strong gainer, up after it saw strong earnings momentum during the third quarter.

European stocks have been rangebound for much of the past month as a plethora of risks confronts investors. In the UK, eyes will be on Wednesday’s budget and the expected package of tax rises and spending cuts, while traders will also be watching Eurozone inflation data due later in the week.

Meanwhile, with just a week to go, the US presidential election remains too close to call.

“The US election is likely to be the primary catalyst for the next move in European equities,” Hani Redha, portfolio manager for global multi-asset at PineBridge Investments, said. “Given the current stagnation in the Eurozone’s economy, this driver is likely to be decisive.”

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--With assistance from Sagarika Jaisinghani.

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