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StockBeat: A Sea of Red as Earnings Live Down to Expectations

By Geoffrey Smith

Investing.com -- CSX (NASDAQ:CSX) and Netflix (NASDAQ:NFLX) set the tone for a sell-off in stocks on Wednesday, but Europe’s blue chips have followed swiftly in putting out some equally dismal updates this morning.

The benchmark Stoxx 600 was down 0.5% at a three-week low of 385.68 by mid-morning in Europe, a performance that would have been even worse without a bright update from pharma giant and index heavyweight Novartis (SIX:NOVN), which rose 3.3% to an all-time high after raising its full-year guidance.

Germany’s Dax and Spain’s IBEX were both down 1%, while the U.K. FTSE 100 fell 0.6%.

Software giant SAP (DE:SAPG), Germany’s most valuable company, fell 6.5% after revenue fell short of forecasts due to weakness in Asia, something that looks set to be a recurring theme for this quarter. SAP touched a nerve already laid bare overnight by another sharp fall in Japanese exports and an unexpected interest rate cut from South Korea.

The IBEX’s problems were due largely to construction group ACS (MC:ACS), which fell 5.6% after a disappointing update from its Australian subsidiary.

Nordea (HE:NDAFI), the biggest bank in the Nordic region, fell 6.1% after missing consensus on profit by some 10% and announcing it would review its financial targets for the year. Higher compliance costs in the wake of a money-laundering scandal and rock-bottom interest rates were largely responsible for the miss.

Anglo American (LON:AAL), the world’s biggest producer of diamonds, fell 1% after announcing a drop in gem sales in the first half of the year. It revised down its forecasts for diamond output this year, citing weak demand. However, it raised its forecast slightly for iron ore output and maintained its guidance on copper and coal.

Fast fashion group ASOS (LON:ASOS) continued its fall from grace, saying that problems with its new warehouses would lead to this year’s pretax profit being barely half of consensus forecasts. The stock fell as much as 14% before paring losses. It’s now wiped out its gains for this year and is testing a five-year low.

And luxury goods group Richemont (SIX:CFR), the owner of jeweler Cartier, fell as much as 4% after announcing results that suffered from the political unrest in Hong Kong, one of its most important markets. Like Swatch (SIX:UHR) and Burberry (LON:BRBY) before it, the company noted that tourist numbers had dropped, and that it had closed its stores out of safety concerns. The stock found bidders at lower levels and traded down only 0.6% by 4:45 AM ET (0845 GMT).

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