(Bloomberg) -- European stocks edged lower, but ended the session well off earlier lows as investors monitored the outlook for interest rates and a busy week for corporate earnings.
The Stoxx 600 Index was 0.2% lower by the close, after earlier dropping as much as 0.8% in its second day of declines. Travel and leisure stocks outperformed, while the technology sector was boosted by SAP SE, which hit a record high after beating expectations on key metrics and boosting parts of its full-year guidance.
Sentiment had earlier been dented by a selloff in the global bond market on worries that the Federal Reserve could cut interest rates at a slower-than-expected pace. Investors are also concerned that a possible victory for US presidential candidate Donald Trump would result in inflationary tariffs.
Utilities, a sector which typically suffers when the cost of borrowing money rises, was the biggest laggard in Europe on Tuesday.
Among other individual stocks, Eurofins Scientific shares slumped after the laboratory-testing company reported third-quarter revenue that missed estimates.
Fed officials this week gave a cautious tone on the pace of future interest-rate cuts, sending shock waves through global fixed-income markets, with US 10-year government bond yields topping 4.2% for the first time since July.
Andrea Tueni, head of sales trading at Saxo Banque France, said the impact on yields was being exacerbated by wagers on a possible Republican win in November.
The European earnings season has also been largely downbeat so far. About 40% of MSCI Europe companies have reported results below expectations so far, while 36% have beaten estimates, according to data compiled by Bloomberg Intelligence.
“There’s actually some resilience to this bad news,” said Christopher Dembik, senior investment adviser at Pictet Asset Management, adding that investors had already priced in analysts’ lowered expectations.
For more on equity markets:
- Banks’ Market-Beating Rally Faces Earnings Test: Taking Stock
- M&A Watch Europe: Wendel, Monroe Capital; Mulberry; LightOn
- M&A Watch Europe: Wendel, Monroe Capital; Mulberry; LightOn
- US Stock Futures Unchanged; Zions, Cheesecake Factory Gain
- Borrowers’ Budget Blues: The London Rush
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--With assistance from Sagarika Jaisinghani.
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