Royston Carr Asset Management - In spite of a robust earnings season, investor sentiment in Europe remains unstable.
Online PR News – 20-November-2018 – Taipei City, Taiwan – Royston Carr Asset Management analysts report that European equities lost ground last month in spite of the majority of businesses reporting strong earnings in the third quarter.
Europe's benchmark Stoxx 600 index decreased 6 percent in October, even after a rally of 1.7 percent in the final trade session.
Taylor Newman, Director of Mergers & Acquisitions at Royston Carr Asset Management says that although revenue and earnings-per-share growth stayed strong and the majority of European firms have maintained their full year guidance to the market, investor confidence remains unsteady.
A decline in demand from China for exports from the euro zone, growing trade tensions and Italy's budget issues have negatively affected European expansion sentiment. Royston Carr Asset Management analysts believe there may be room for recovery but that certain things will need to change.
Although defensive stocks have mostly outperformed expectations, Royston Carr Asset Management analysts say sectors which are more affected by global economic turmoil have sold off materially.
At the end of last month, 125 businesses on the Stoxx 600 index had reported earnings for the last quarter. More than a third of these companies' results had exceeded market expectations. Consumer cyclicals, healthcare and technology have reported the highest number of earnings beats while basic materials and telecommunications reported the highest number of misses.
Royston Carr Asset Management analysts say Europe's automotive sector is currently one of the least popular in Europe with investors showing concern over the effects of regulatory shifts in the industry and the US-China trade dispute.
Also contributing to a decrease in automotive sales in Europe in September was the introduction of new emissions regulations. This decline in sales impacted performance in the sector for the third quarter.