Heavy losses in utility EDF after a profit warning and other disappointing company updates weighed on European shares on Monday, pushing the pan-European benchmark to its lowest level since end-September. The pan-European STOXX 600 was 0.7 percent lower at its close, with almost every sector ending in negative territory.
This was the STOXX 600's fifth straight session of losses, its longest losing streak since the end of May, though Schroders' head of multi-asset investing for Europe, Aymeric Forest, said 2017 as a whole has been a record year for equities, with realised volatility hitting all-time low levels.
France's EDF was the biggest faller on the day, dropping more than 10 percent after lowering its 2018 earnings and cash flow forecasts. This was due to lower than expected power consumption, lower availability of some of its nuclear reactors in early 2018 and a drop in capacity compensation in Britain.
Exane BNP Paribas affirmed its underperform rating on EDF. "The market is overly focused on the power price strength and not reflecting appropriately all the other issues facing the group, including the fact that if nuclear output falls short of expectations, higher power prices are actually a negative for them," it said in an email to clients.
Sonova was another faller, down 2.4 percent. The Swiss hearing aid maker reported first-half results that fell short of analyst expectations, as sales in the US were dented by an overhaul of the company's retail network there. According to Thomson Reuters IBES data, about 76 percent of MSCI EMU companies have reported earnings so far, with 50 percent of them beating expectations. That compares to 72 percent for the S&P 500 and 54 percent for the broader MSCI Europe index.
However results from pharma heavyweight Novartis were welcomed by the market. Its shares rose 1.1 percent after data showed that patients on its new eye-drug showed less disease activity than those on its rivals Bayer's and Regeneron's drug. Bayer was down 1.1 percent.
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