European shares are in negative territory in the early afternoon Tuesday, as investors face some disappointing earnings updates. Concerns that a snap Italian election could be called is also weighing on investor sentiment and sending Italian banks lower.
By around 1300 BST the EUROSTOXX 600 was 0.28% lower, while the benchmark EUROSTOXX 50 had lost 0.52%. Regional bourses were also in the red. The German DAX fell 0.65%, the French CAC was down 0.51% and the Spanish IBEX was off 0.33%.
Company earnings disappoint
Tuesday hosted a number of company earnings releases and many of them proved a disappointment to investors.
The world’s largest employment agency, Adecco, posted earnings that were below expectations. And, although the company was upbeat that some one-off factors wre no longer relevant and other developments should prove positive for the company going forward, Adecco shares slid 5.81% to CHF63.54.
Other shares that declined in the wake of their Q1 earnings reports included:
- Deutsche Post shares fell 5.55% to trade at €35.09.
- William Demant shares slipped 9.32% to DKK233.40.
- LafargeHolcim shares were 3.23% lower at CHF54.52.
Telecom Italia shares were also lower Tuesday as the newly appointed board, which features all of Elliott Management’s nominees, re-appointed existing CEO Genish into the role. Genish can claim support from controlling shareholder Vivendi but also has the respect of activist investor Elliott.
Italian election concerns
Also weighing on investor sentiment Tuesday are growing concerns that a snap Italian election could be called.
Talks to form a coalition government have been ongoing since the March 4 elections resulted in a hung parliament. Italian President Sergio Matarell has urged the political parties to come to an agreement in five rounds of coalition talks since then.
However, the talks have been unsuccessful with no agreement forthcoming. This means Italian voters could return to the polls as soon as the summer.
Investors don’t like political instability as it can undermine economic and corporate stability. Italian banks are trading in the red after the latest round of failed talks.