European markets remain cautious despite majority of firms meeting expectations
European shares dipped early today, slipping from eight-week highs hit in the previous day, as a batch of mixed results from blue-chips like Unilever and BASF prompted investors to book some profits.
At eight o'clock this morning, the FTSEurofirst 300 index of top European shares was down 0.3pc at 1,211.39 points, while the eurozone's Euro STOXX 50 index was down 0.5pc at 2,740.36 points.
Stocks were little changed after later data showed German business morale rose slightly more than expected in July, inching higher for a third straight month.
Shares in Unilever fell 1.5pc after the consumer goods giant reported lower-than-expected quarterly sales and warned that growth was slowing in emerging markets.
Germany's BASF dropped 4pc after the world's largest chemicals company by sales said meeting its profit target for the year will be "significantly more challenging" than it had previously expected.
French telecom group Orange also featured among the big fallers, losing 4.4pc after it disclosed that it would pay €2.14bn to the French state over a tax dispute on which it intended to appeal.
"Overall, the earnings season isn't too bad, but there's a lot of nervousness on the market after the 10 percent rally we've just got, with very few buyers left," said Guillaume Dumans, co-ahead of 2Bremans, a Paris-based research firm using behavioural finance to monitor investor sentiment.
"We expect some profit-taking today, that's what our indicator shows. Volumes are also drying up with many market players going on holidays, which can potentially exacerbate the swings."
About 23pc of the STOXX Europe 600 companies have reported second-quarter results so far this earnings season, with 51pc of the firms meeting or beating profit forecasts, according to Thomson Reuters StarMine data. On revenues, 63pc of the firms have met or beaten forecasts.
Around Europe, UK's FTSE 100 index was down 0.3pc, Germany's DAX index down 0.6pc, and France's CAC 40 down 0.2pc.
Aurel BGC chartist Gerard Sagnier saw a potential consolidation period starting on indexes, although he regarded the medium-term trend as remaining positive, with the Euro STOXX 50 still trading above its 50-day moving average, a key support level.
"People should be cautious in the short term, but the pull-backs in Europe will be good buying opportunities," Sagnier said.