FRANKFURT: European stocks broke a five-session winning run on Tuesday, with car makers helping to drive the market lower after a Volkswagen AG financial update.
The Stoxx Europe 600 index SXXP, -0.77% fell 0.8% to end at 347.45. For May, however, the pan-European benchmark nabbed a 1.8% advance, representing its best monthly performance since November.
“It’s been a lackluster end to a choppy month for European markets,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note.
“It’s still been a wall of worry with concerns about weak manufacturing data from China, Japan, the U.K. and the U.S. weighing on sentiment,” Hewson said. But “recovering commodity prices and improving consumer spending patterns have helped maintain the prospect that we could be starting to see a little bit of a pickup in consumer confidence,” he added.
The Stoxx 600 rose 0.1% on Monday in thin trade, as markets in the U.K. and U.S. were closed for holidays.
Economic news: Stocks in Europe stayed lower after data showed eurozone inflation improved slightly in May, but remained in negative territory. The flash consumer-price index rose to negative 0.1% from negative 0.2% in April, while the core reading — which strips out the volatile energy, food and alcohol and tobacco segments — rose to 0.8% from 0.7%. Both numbers met forecasts.
The data are seen as unlikely to push the European Central Bank to make any changes to monetary policy when it meets on Thursday, as the bank has already launched an aggressive easing program and driven deposit rates into negative territory.
The euro EURUSD, -0.0809% traded at $1.1132, roughly unchanged from ahead of the data but down 0.1% on the day.
“The reason we have not seen much move for the euro is because investors are not expecting much reaction from [ECB President Mario] Draghi, and only a lousy inflation number could have paved the way for a more exciting meeting,” said Naeem Aslam, chief market analyst at ThinkForex, in a note.
“All eyes will be on Draghi now and how [he] will strike a balance between hawkish and dovish tone,” Aslam added.
Eurozone unemployment remained at 10.2% in April, in line with expectations. Unemployment in Germany in May fell to 6.1% — the lowest level since the country’s reunification.
Movers: Shares of Volkswagen VOW3, -2.34% VLKAY, -0.64% lost 2.6% after the car maker reported a 20% drop in profit for the first quarter, missing forecasts. However, the profit was still an improvement from its record full-year loss in 2015, indicating that the auto company has digested most of the financial pain from its emissions-cheating scandal.
Other car makers followed VW lower, with Peugeot SA UG, -1.01% finishing down 1% and BMW AG BMW, +0.63% ending 0.2% higher after dropping earlier.
Statoil ASA STL, -1.77% gave up 1.8% after RBC Capital Markets cut the Norwegian oil giant to underperform from sector perform. West Texas Intermediate crude CLN6, -0.69% recently traded 1.1% higher, while Brent LCON6, -0.16% was up 0.6%.
Shares of Aryzta AG ARYN, -4.70% slumped 4.7% after the Swiss frozen-food company said quarterly revenue fell 2.4%.
Indexes: Germany’s DAX 30 index DAX, -0.68% shed 0.7% to end at 10,262.74, while France’s CAC 40 index PX1, -0.53% gave up 0.5% to 4,505.62.
The U.K.’s FTSE 100 index UKX, -0.64% dropped 0.6% to end at 6,230.79, as a poll showing more support in the U.K. for Brexit appeared to weigh on sentiment.
