European stocks post weekly loss as France turmoil, oil prices dent earnings optimism
The Stoxx 600 is down about 1.4% for the week
European stocks posted their steepest weekly loss since early September as tensions in France and rising oil prices dampened optimism from strong corporate earnings. The Stoxx 600 index fell 0.31% to close at 635.77 points on Friday, marking a 1.4% decline for the week. This comes after a week filled with earnings from major companies such as SAP, Barclays, and Kering, which provided insights into economic conditions and consumer sentiment.
While earnings estimates for European companies have improved, higher crude prices and the unrest in France have left investors cautious. Josh Stevens, chief investment officer at CresAlta Investment Management, stated that the situation in France will likely persist as a market factor through the presidential election cycle in April.
The unrest has added an explosive backdrop to the election, scheduled for next year. Kering suffered the biggest loss of the Stoxx 600, dropping 16.6% after third-quarter sales at its flagship Gucci brand fell. The luxury sector, the worst-performing European sector so far this year, fell 3.6%. L'Oréal, a French cosmetics group, rose 5.6% after beating third-quarter sales forecasts.
Other notable performance includes defense stocks dropping 3.8%, with French jet engine maker Safran reporting a 10% decline following its results. The European Central Bank is set to meet next week, with investors pricing in a high probability of a rate hold, given the hikes this year to combat price pressures from high oil prices.
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