As Nokia (NYSE:NOK) and BE Semiconductor reported disappointing profits on Thursday, investors worried about ongoing inflation. This caused European stocks to fall for the second day in a row.
Due to protracted patent disputes that squeezed profits and countered strong demand for 5G equipment, Finnish telecom equipment manufacturer Nokia and rival Ericsson (BS:ERICAs) posted weaker-than-expected earnings.
The STOXX 600 index for the entire region was down 0.5%, and the two companies were among the top percentage losers.
BE Semiconductor’s stock fell 3.3% after the chip equipment company said that fourth-quarter sales would go down and that U.S. restrictions on exports to China had made the outlook for the sector even worse.
ASM International (OTC: ASMIY), ASML Holding (NASDAQ: ASML), and Aixtron all saw losses of 0.7% to 1% following Nordic Semiconductor’s disappointing outlook and unsettling results release.
The majority of STOXX 600 industries were in the red, with telecoms down 2% to lead the fall.
On Wednesday, the STOXX 600 ended a four-day rise because inflation numbers from Canada and the UK were worse than expected. This made people worry that central banks might take stronger steps to control prices.
“Risk asset and bond markets have largely reacted negatively to the inflation report. In the end, it means that central banks like the Fed and the Bank of Canada may need to tighten even further. According to Stephen Gallo, head of FX strategy for BMO Capital Markets in Europe,
“These changes are all negative for non-dollar currencies. Both the equity markets and risk appetite are negatively impacted by them.
Data released on Thursday showed that German producer prices increased more than anticipated in September as energy prices jumped sharply, adding to the worries.
After more U.S. Treasuries were sold off, the interest rates on German government bonds went up to new multi-year highs as investors thought about what might happen if the European Central Bank takes more steps to tighten monetary policy at its policy meeting next week.
The Finnish banking group’s earnings were better than expected, which made Nordea and Hermes rise by 0.3% and 0.4%, respectively. This was because its sales growth picked up a lot and showed no signs of slowing down.
The stock price of Swedish Match AB went up by 1.7% after Philip Morris International (NYSE:PM) raised its offer to buy the company that makes nicotine products.
