European stocks were sharply lower on Wednesday as a chaotic session in Japan compounded gloom over earnings updates from the United States, where Intel, Yahoo and Wells Fargo failed to meet expectations.
Germany’s DAX 30 was down 1,3% at 5 388,61 and the French CAC 40 index opened 1,2% lower but later recovered a bit to 4 764,25, down 0,89%. The United Kingdom’s FTSE 100 index was down 56,4 points at 5 642,60.
Given that ”the selling was relentless through the night”, the ”sea of red” was to be expected, said trader Tom Hougaard at CityIndex.
Intel reported disappointing fourth-quarter results and issued a downbeat projection about the current period, blaming slowing sales of desktop computers that use its chips.
ASML Holding NV, one of Intel’s suppliers, was up 0,5% after reporting lower profits but a bullish outlook. Infineon AG was down 1,8%, reflecting the full impact of the earnings disappointment.
The extent of the declines caused the Tokyo Stock Exchange to close early, having dropped more than 700 points at one stage, as technology stocks there reflected the impact of the results.
The Nikkei 225 index dropped 2,9%, or 464,77 points, to close at 15 341,18 points — its biggest one-day drop since May 10 2004. It has fallen nearly 6% in the past two days.
Investors dumped shares, particularly electronics issues, amid jitters about a widening criminal investigation into internet start-up Livedoor. The trading day was shortened by 20 minutes as authorities warned that the exchange would not be able to handle the increased volume of trading.
Richard Hunter, head of UK equities at Hargreaves Lansdown stockbrokers, said the earnings disappointment in the US lay behind most of London’s weakness.
”The situation in Japan is not going to help sentiment, but people are nervous at the start of the corporate earnings season in the US,” he said.
In Europe, surging oil prices — back near $67 a barrel on worries about supply disruptions from Iran and Nigeria — were exacerbating the declines.
Industrial stocks such as Schneider Electric SA, down 2%, and airlines such as British Airways plc, down 2,2%, were heavily hit.
SABMiller shares fell 2,9% in London after the brewer reported that third-quarter sales fell in the US and grew less than analysts had expected in South Africa.
Shares in drug maker AstraZeneca fell 3,8% after the company said it lost a US court ruling over two patents covering the heart drug Toprol-XL.
On the flipside, shares of athletic apparel and shoe maker Puma AG rose nearly 3% after one of its biggest shareholder denied rumours it was looking to unload its stake in the company. — Sapa-AP