(Bloomberg) -- European equities dropped at the open as major companies spooked investors with sales declines and profit warnings.
The Stoxx Europe 600 retreated 0.6%. After Asos Plc cut its profit guidance, sinking 22%, Boohoo Group Plc, a fellow fashion retailer, tumbled as much a 5.1%. SAP SE declined up to 10% after a decrease in growth in new cloud bookings. Richemont fell 3.5% after reporting a surprise drop in revenue from its watch business.
Investors are carefully watching earnings and profit outlooks for signs of how strong the effect of the U.S.-China trade spat has been on corporations and their plans. Europe's equity benchmark is up 15% this year, compared to 19% for the S&P 500, as traders have been buoyed by hopes of a trade deal and softer monetary policy.
“Profit warnings and lackluster reporting continue,” said Ulrich Urbahn, head of multi-asset strategy and research at Joh Berenberg Gossler & Co. in Frankfurt. “There will be better buying opportunities later this year if we have more clarity on the trade truce and Brexit. We expect a volatile sideways market for the next months and as we are at the upper end at the moment, there should be better entry points."
To contact the reporter on this story: Ksenia Galouchko in London at kgalouchko1@bloomberg.net
To contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Jon Menon
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