European shares stalled on Wednesday as weak results from the troubled auto sector dragged the market down and investors' confidence in a rally that has sent stocks shooting up this year showed signs of fraying.
Exuberance in Chinese shares over hopes for fresh stimulus failed to spill over into European trading where the STOXX 600 hovered near five-month highs, dipping 0.1 per cent.
Auto stocks fell after German bearings maker Schaeffler warned of an “extremely challenging” business environment in 2019 and said it would restructure, sending its shares down 10.8 per cent. The sector index fell 1.3 per cent as German carmakers Daimler, BMW, and Volkswagen tumbled, dragging the DAX down 0.4 per cent.
French car suppliers Faurecia and Valeo also fell 1.4 to 2.9 per cent. Small-cap Swiss autos supplier Autoneum also fell 9.3 per cent after reporting a drop in profitability. Results from the tech sector were more encouraging. Logitech shares rose 1.3 per cent to a four-month high after the chipmaker said it expects annual sales to increase by mid to high single-digit in the next financial year ending March 2020.
Dialog Semiconductor shares jumped 8.6 per cent as traders said its headline results were “in line” and a decline in revenue as the Anglo-German chip designer reduces its exposure to Apple had already been flagged. Italy's Prysmian, the world's largest cable maker, fell 7 per cent after its results were deemed a “mixed bag” by analysts and Kepler Cheuvreux downgraded the stock to “hold” from “buy”.
The company revised upwards its savings expectations from a US acquisition to offset provisions it has taken on its WesternLink cable connection. Also among top movers, British American Tobacco and Imperial Brands rose 5.5 and 2.7 per cent respectively as investors bet the surprise resignation of US Food & Drug Administration Commissioner Scott Gottlieb may call into question the agency's regulation of e-cigarettes.