26 October 2016, 12:10
By Mike Bird
European stocks opened lower Wednesday, following Asian equity markets downward after a string of disappointing earnings reports from large U.S. companies.
The Stoxx Europe 600 index pulled back 0.7% in early European trading, led by a 1% drop in the U.K.'s FTSE 100 index and a 0.8% decline in Germany's DAX.
Energy companies led the fall in European stocks, with the oil & gas sector of the Stoxx 600 down 1.6%, following a dip in crude oil prices.
West Texas Intermediate crude oil fell back below $50 per barrel, down by 1.3% to $49.29. Brent crude prices fell by 1.2% to $50.20.
Consumer confidence data from Germany released early Wednesday morning showed slightly weaker sentiment than expected at 9.7, its lowest reading since June and below the 10 that analysts had forecast.
"Despite somewhat more downbeat outlook for personal finances, consumers assessed that economic prospects had improved, with the relevant indicator rising to the highest level in more than a year," said Mantas Vanagas, economist at Daiwa Capital Markets Europe.
Meanwhile, French consumer sentiment in October, recorded by statistical agency INSEE, showed the joint-strongest confidence level since 2007. The index rose to 98, but is still below 100, the long term average level since 1987.
Asian stocks closed broadly lower, with Hong Kong's Hang Seng down 1%, and China's Shenzhen A-share index down 0.4%. Japanese equities bucked the trend, and the Nikkei 225 index closed up slightly%.
After falling by as much as 1.3% intraday on Tuesday, sterling was largely flat, up 0.1% to $1.221, but down 0.1% to 1.117 against the euro.
"With the terms and conditions of the U.K.'s future trade links still unclear it is too early to rule out further downside risks in sterling," said Geoffrey Yu, head of UBS Wealth Management's U.K. investment office. Mr. Yu believes that sterling could fall to as low as $1.10 temporarily over the next year.
Write to Mike Bird at Mike.Bird@wsj.com
