European shares falter after three-day gains; HelloFresh tanks

Europe’s benchmark index dropped on Thursday, dragged by energy stocks, following a three-day run on optimism regarding a peak in policy tightening and eventual rate cuts.

The pan-European STOXX 600 fell 0.4% by 0940 GMT after gaining 2.5% over the past three days and scaling a more than one-month high on Wednesday.

Through the course of the week, inflation data out of the United States and the UK reinforced hopes that their central banks were done raising rates. Investors are shifting focus to the euro zone’s inflation reading on Friday.

“A bit of profit-taking is going on following the wave of euphoria after lower-than-expected inflation led to quite a lot of optimism that perhaps rate cuts would come sooner rather than later,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown (LON:HRGV).

“Also, clouds have been gathering over the euro zone economy for some time with Germany in particular facing a slowdown.”

Energy stocks led sectoral declines with a 1.4% fall, tracking lower crude oil prices.

The luxury sector also eased from the near two-month high hit on Wednesday.

Prominent names, including Kering (LON:0IIH), LVMH (EPA:LVMH) and Richemont (LON:0QMU) shed over 1% each following Burberry’s 8% drop after the British luxury fashion brand said it was grappling with a slowdown in global spending on luxury and would struggle to meet its annual revenue forecast.

Also dampening the sentiment was fresh data pointing to persistent problems in China’s housing sector that could disrupt the top metal consumer’s overall recovery.

HelloFresh (OTC:HLFFF) tanked 22.5% to the bottom of the STOXX 600 after the German meal-kit maker cut its annual core profit outlook and narrowed the revenue growth guidance.

German chemicals maker BASF lost 2.4% following a Jefferies rating downgrade.

On the flip side, Embracer jumped 11.4% after the Swedish games developer posted a bigger-than-expected second-quarter operating profit.

Siemens gained 6% after the trains-to-industrial software maker posted better-than-estimated fourth-quarter industrial profit, helping Germany’s DAX rise 0.3%.

Italy’s state-controlled defence and aerospace group Leonardo added 1.7% on plans to sell a 6.3% stake in its U.S. subsidiary Leonardo DRS.