European markets fall as positive sentiment vanishes; Michelin sheds 9% as tariffs weigh
LONDON — European stocks were lower on Tuesday morning, reversing largely positive sentiment at the start of the week, despite the threat of a new trade dispute between the U.S. and China.
The pan-European Stoxx 600 was last seen trading 0.8% lower, with most sectors and major bourses in negative territory.
In corporate news, shares of Michelin were 9.7% lower in early trade, after the company slashed its full-year guidance citing “further deterioration of the business environment.”
The company said that despite year-on-year volume growth in the third quarter – even as “a chaotic business context” and uncertainty had weighed on demand – its results had been dragged down by the North American business. Sales fell by close to 10% in North America, Michelin said, with “competitiveness … impacted by tariffs.” The weaker U.S. dollar had also been a headwind, it noted.
The firm is set to publish its third-quarter results on Oct. 22.
In a note on Tuesday morning, Deutsche Bank slashed its target price for Michelin stock by 16.2%. “Michelin has cut the FY25 outlook as was well expected but the magnitude of the cut is generally far bigger than expected,” Deutsche’s Christoph Laskawi said.
At the other end of the index, Ericsson shares were 13.4% higher after the company’s third-quarter earnings beat estimates. The firm’s net income surged 191% year-on-year to hit 11.3 billion Swedish kronor ($1.2 billion).
“In Q3, we established margins at a new long-term level following strong operational execution over the past few years. Cloud Software and Services sales grew 9%, driven by strong growth in core networks,” CEO Börje Ekholm said in a statement alongside the results.
Meanwhile, oil giant BP updated its guidance on Tuesday ahead of its third-quarter earnings release, which is due for publication in early November. The company said it was expecting “post-tax adjusting items relating to asset impairments” of up to $500 million in its fiscal third quarter. Shares of BP were 1.5% lower in morning trade.
Defense stocks dip
Regional defense stocks also sold off on Tuesday morning. The Stoxx Europe Aerospace and Defense index was 1.5% lower as investors assessed the possible impact of a rare earths supply bottleneck. The minerals are critical in the production of various defense technologies, including fighter jets, submarines, missiles and radar systems.
German military contractor Renk, down 2.6%, Italy’s Leonardo, down 1.7%, and Sweden’s Saab, down 1.7%, were among the industry’s biggest movers.
Elsewhere, the British pound fell 0.5% against both the U.S. dollar and the euro on Tuesday morning following the release of U.K. employment figures. Data from the country’s Office for National Statistics showed the unemployment rate rose to an estimated 4.8% in the three months to August, slightly higher than the 4.7% predicted by economists in a Reuters poll.
Investors will also be watching for news from the IMF and World Bank annual meetings in Washington. The IMF is set to release its latest World Economic Outlook report Tuesday.
The meetings bring together central bankers, ministers of finance and development, the private sector, civil society and academia to discuss issues of global concern, including the global economy, poverty eradication and economic development.
