by Diana Mandia

(Reuters) – European stocks ended sharply lower on Monday as weaker-than-expected economic growth figures from China and a gloomy outlook for some luxury goods names weighed on sentiment as the European corporate earnings season gets underway.

In Paris, the CAC 40 lost 1.19% to 7,632.71 points. In Frankfurt, the Dax fell by 0.84% ​​and in London, the FTSE 100 lost 0.85%.

The EuroStoxx 50 index ended down 1.19%, the FTSEurofirst 300 fell 0.99% and the Stoxx 600 lost 1.02%.

Weak economic data on China’s economic growth prompted caution in stock markets on Monday as a housing crisis and a weak jobs market weighed on domestic demand in the world’s second-largest economy and sent retail sales to an 18-month low.

The figures and outlook for two leading groups in the luxury sector, which is heavily exposed to the Asian giant, also did not contribute to optimism: watchmaker Swatch reported a sharp drop in its turnover in the first half of the year following a collapse in Chinese demand, and British brand Burberry issued a profit warning and waived dividend payments for this year.

Caution was also required as the corporate earnings season has only just started in Europe and before the European Central Bank (ECB) meeting scheduled for Thursday, even if a status quo on rates is expected.

In France, the political impasse persists a few days before the opening of the 17th legislature on Thursday and in a context of concern about public finances.

In the United States, markets are assessing the fallout from the assassination attempt against Donald Trump on Sunday and are now judging the former Republican president’s victory on November 5 more likely.

“In a Republican administration, you’ll see weaker tax and regulatory policy…which is generally good for stocks. That’s kind of what we’re seeing in terms of investor expectations right now,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

VALUES

Burberry fell more than 16% and watchmaker Swatch fell 9.7% after their announcements, dragging the luxury sector down with them: Kering fell 5.2% and Richemont 4.1%, while LVMH and Hermès lost 2.6% and 2.5% respectively.

The luxury sector in Europe ended with a loss of 2.8%.

Atos gained 19.2% after announcing on Monday that a group of banks and bondholders had committed to a target amount of 1.675 billion euros in new financing to restructure its debt.

Elsewhere in Europe, Finnish bank Nordea fell 3.8% after reporting second-quarter operating profit just below expectations.

TomTom fell 8.3% as the digital mapping specialist suspended its 2025 forecast amid weak demand for new cars.

A WALL STREET

At the time of the European closing, the Dow Jones gained 0.88%, the Standard & Poor’s 500 0.72% and the Nasdaq Composite 0.85%, with bets on seeing Donald Trump win a second term helping to stimulate the appetite for risky assets.

Department store chain Macy’s, which has ended takeover talks with the investor consortium of Arkhouse Management and Brigade Capital, is down more than 12%.

TODAY’S INDICATORS

In the eurozone, industrial production fell by 0.6% in May compared to the previous month and by 2.9% year-on-year, according to data published Monday by the European Union’s statistical agency Eurostat.

CHANGES

The dollar was fairly stable at the close in Europe ahead of Federal Reserve Chairman Jerome Powell’s speech to the Economic Club of Washington and after rising earlier in the day amid bets about a possible return of Donald Trump to the White House.

The greenback gained 0.01% against a basket of benchmark currencies while the euro advanced 0.04% to 1.0910 dollars.

Cryptocurrencies, including bitcoin (+8%), are also progressing, helped by Donald Trump’s hopes of re-election in the United States.

RATE

Eurozone bond yields edged lower on Monday as investors awaited Thursday’s ECB meeting and tried to gauge the impact on the market of the attempted assassination of Donald Trump.

The yield on the ten-year German Bund fell 2.5 basis points to 2.4700% and that of the ten-year OAT fell 4.4 basis points to 3.1100%.

In the United States, the yield on ten-year Treasuries rose 2.7 basis points to 4.2138%, as investors believe that the attack on Donald Trump increases the Republican candidate’s chances of victory and the probability of policies likely to increase public debt and fuel inflation.

OIL

Oil prices fell on Monday as concerns over demand in China, the main importer of the black gold, offset supply restrictions from OPEC+ and geopolitical tensions in the Middle East.

Brent fell by 0.22% to $84.84 per barrel and US light crude (West Texas Intermediate, WTI) by 0.39% to $81.89.

(Written by Diana Mandiá, edited by Blandine Hénault)

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