European stock markets earnings steady, Middle East tensions in focus

(Bloomberg) — European stocks held steady ahead of a busy earnings week. Investors remain cautious about the health of the European economy and growing tensions in the Middle East.

The Stoxx Europe 600 index was little changed as of 8:19 a.m. in London. Banks and insurance companies lagged, while energy stocks outperformed as oil prices rebounded from last week’s losses.

Among stocks, JDE Peet’s NV soared after investment holding company JAB agreed to buy Mondelez International Inc.’s stake in the coffee retailer. Munich Re fell after a rating downgrade.

Investors are keeping a close eye on the health of major economies, with France’s scope rating downgraded today in another warning about the country’s fiscal health. Geopolitics also takes center stage, with developments in the Middle East, the war in Ukraine and the upcoming US election all coming into focus.

Disappointing results last week also dampened investor sentiment. Joachim Klement, head of strategy, accounting and sustainability at Liberum Capital, said weak earnings from companies such as ASML Holding NV could put pressure on technology index heavyweights such as SAP SE, which will report after the close today.

The upcoming U.S. election will also keep many investors on the sidelines as the outcome remains uncertain. “Overall, investors appear to be increasingly cautious about the medium-term outlook over the next six months,” Clement added. “As a result, gains in selected stocks will be used to take profits.”

However, Barclays strategists led by Emmanuel Cau said a mixed start to the earnings season was not enough to derail gains in global stocks as recent U.S. data bolstered talk of a soft landing.

European company executives are more focused than their U.S. counterparts on Donald Trump’s pledge to impose tariffs on all imports if he returns to the White House, with European companies mentioning “tariffs” more frequently on conference calls than their U.S. counterparts .

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