European stocks declined as ASML Holding's (ASML, Financial) disappointing order figures and a drop in energy shares weighed on markets. The Stoxx Europe 600 Index closed 0.8% lower, remaining close to its record high set in late September. ASML saw a significant 16% drop after releasing its earnings report, causing technology stocks to fall by 6.5%, marking the largest sector decline in nearly four years.
Energy stocks fell sharply alongside a decrease in oil prices, following reports suggesting Israel will not target Iran's energy facilities for now. The energy sector index experienced a drop of up to 3.5%.
Ericsson's (ERIC) shares rose nearly 11% after the Swedish telecom equipment maker reported earnings that surpassed analyst expectations. Luxury goods company LVMH announced a decline in sales for its largest business unit, setting a somber tone for Europe's luxury industry earnings season. This marks the first sales drop since 2020, contrary to forecasts of slight growth.
A survey by Bank of America's European fund managers indicates expectations for near-term growth in European stock markets. About 27% of respondents believe cyclical stocks in the region will outperform defensive ones, the highest proportion since June. However, Mirabaud's Senior Portfolio Manager Yann Azuelos expressed caution, given the geopolitical risks.
While current data shows the Eurozone's economy is cooling gradually rather than sharply declining, concerns are rising over France's fiscal situation and Germany's economic slowdown. According to the survey, Germany is experiencing a mild recession, with output expected to stagnate throughout 2024, highlighting the struggles of Europe's largest economy.
