European Stocks Retreat from Record Highs, Iran Risks and Issuer Earnings in Focus
European stocks weakened on Thursday (February 19th), retreating from Wednesday's record close, driven by disappointing earnings reports from several major issuers and growing investor caution regarding geopolitical risks. The Stoxx Europe 600 Index fell 0.5% at the close, with the banking and industrial goods sectors the main drags, while real estate and food and beverages were among the relatively strong performers.
At the stock level, Airbus plunged 6.8% after warning that unstable engine supplies for its A320 family of jets were hampering production and deliveries. Renault fell 3.1% after the company predicted weaker profitability this year due to the launch of lower-priced electric vehicle models.
Conversely, several stocks managed to withstand the index's decline. Nestlé jumped 3.9% after conveying an expected sales growth outlook under its new CEO. Air France-KLM surged 12% after posting better-than-expected earnings and remaining optimistic about its lucrative North Atlantic routes.
The market also continues to assess the outlook for interest rates and growth, amid signs that geopolitical tensions remain a major factor. The head of the UN nuclear watchdog said the US military buildup in the Middle East risks narrowing Iran's chances of reaching a diplomatic agreement on its nuclear activities—a narrative that has helped lift oil prices and reinforced investor caution.
Despite the weakening index, the European earnings season has generally been slightly better than expected. Bloomberg Intelligence data shows that companies in the MSCI Europe index posted a fourth-quarter profit increase of around 3.6%, above analysts' estimates of 1.3%. Rio Tinto, on the other hand, fell 3.7% after annual profit stagnated, as increases in copper and aluminum failed to offset the impact of one-off restructuring costs, US tariffs, and pressure from China on its iron ore business.
Source: Newsmaker.id
