European equities were steady on Friday after two days of declines as investors look ahead to a busy month of earnings amid concerns over a slowing economy.
After posting its worst first-half performance since 2008, the Stoxx Europe 600 Index closed less than 0.1% lower. The gauge swung between gains and losses during the day. Utility, retail and personal-care stocks were the best performers, while miners and technology lagged.
European stocks have been roiled in 2022 by central banks tightening monetary policy around the globe in order to tame inflation, with the region’s main equities benchmark dropping 16% year to date. Now, strategists are looking ahead to first-half earnings reports with concern that companies may be forced to trim outlooks as consumer spending slows and input costs rise further.
“Global earnings are down 10% from the peak and we expect more weakness during the second-quarter earnings season as companies are still under margin pressure from higher energy prices, rising wages, supply chain disruptions, and high logistics costs,” said Peter Garnry, head of equity strategy at Saxo Bank.
With P/Es Busted, Look to EPS, Duration Risks in 2Q Results
European chipmakers were weaker on Friday after US firm Micron Technology Inc. gave a fourth-quarter outlook that fell short of analyst expectations.
Given the reduced valuations across sectors, some investors may start adding to positions in so-called quality stocks with strong balance sheets and pricing power, according to Kirsty Desson, an investment director at Abrdn.
“In select stocks there’s certainly a great opportunity to buy,” Desson said by phone.
For more on equity markets:
- Autos at 19-Month Low Are Pricing a Lot of Gloom: Taking Stock
- M&A Watch Europe: Siemens, Telecom Italia, Bonduelle, Craneware
- Tepid De Nora IPO Does Little to Shore Up Confidence: ECM Watch
- US Stocks Set for More Losses After Worst First Half Since 1970
- Sorrell Snaps Up Influencer Agency XX Artists: The London Rush
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