European shares slip on utilities drag; focus on economic data, earnings

European shares edged lower on Wednesday, with utilities and financials taking the biggest hit, as investors assessed economic data and corporate earnings ahead of remarks from major central bank chiefs during the day.

The pan-European STOXX 600 lost 0.2% by 0950 GMT, hitting a near one-week low intraday.

Utilities stocks led sectoral declines, falling 1.2% to a one-week low, with Europe’s largest energy networks operator, E.ON, losing 1.8% on expecting a severe hit to fourth-quarter profit at its retail division.

Insurance stocks lost 0.7%, dragged by a 6.2% decline in Swiss Life Holding AG after the insurer’s full-year outlook on real estate worried markets.

Investors awaited comments from the U.S. Federal Reserve Chair Jerome Powell for more clarity on the outlook for rates after some central bank officials noted the resilience of the economy.

European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey are also set to take the stage later in the day.

“We’ll just get a reiteration of the message that they’re not asleep at the wheel… If inflation pressures do grow, they’re willing to act more,” said Patrick Armstrong, chief investment officer at Plurimi Wealth.

“I’m definitely not expecting another hike from the Fed, and don’t think the markets are worried about it anymore.”

Meanwhile, a ECB survey showed euro zone consumers have raised their inflation expectations over the next 12 months to 4%, a potential headache for the central bank to rein in prices.

While ECB chief economist Philip Lane said progress in curbing underlying inflation is not yet enough, policymaker Gabriel Makhlouf acknowledged that a large part of monetary tightening has yet to be passed through and new vulnerabilities were emerging.

On the earnings front, Supermarket group Ahold Delhaize dropped 7.4% after trimming its 2023 earnings forecast and flagging margin weakness in the United States, while ABN Amro slumped 8.7% to the bottom of STOXX 600 after third-quarter net interest income missed expectations.

Danish wind turbine maker Vestas jumped 8.2% following better-than-expected third-quarter operating profits and revenue, while British retailer Marks & Spencer soared 8.7% on a much better-than-expected 75% rise in first-half profit.

Germany’s Commerzbank (ETR:CBKG) rose 2.3% as net profit more than tripled in the third quarter, better than expected.

Of the STOXX 600 companies that have reported third-quarter results, 55.3% topped earnings expectations, slightly above the typical rate of 54%, LSEG data showed on Tuesday.

Meanwhile, Portugal’s PSI Index lost more ground after a brief recovery, down 0.2%, after Tuesday’s 2.5% slide following the unexpected resignation of Prime Minister Antonio Costa.