Vodafone and Home Depot among the fallers as stock markets decline

European shares declined on Tuesday, with Vodafone dropping more than 7 per cent in London, Swedish gaming firm Embracer tanking after warning on full-year earnings and a weak forecast from US retailer Home Depot spurring worries about consumer spending.

Meanwhile, nerves about the US debt ceiling standoff, as well as hawkish rhetoric by European Central Bank (ECB) policymakers, have weighed on investor sentiment in recent weeks, overshadowing an upbeat earnings season from European companies.

Dublin

The Iseq index closed flat, as most stocks made only minor moves in either direction. Ryanair was one of the main climbers, with the airline adding 1.7 per cent to close at €16.06. Packaging group Smurfit Kappa also finished safely in the green, rising 0.7 per cent to €34.46.

Building materials group CRH declined 0.3 per cent to €45.23, while Paddy Power owner Flutter Entertainment finished more or less unchanged at €185.70. Kerry Group fell 0.8 per cent to €94.84.

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The banks had a slightly more positive session, with Bank of Ireland adding 0.4 per cent to €9.21 and AIB gaining 0.6 per cent to €3.97.

London

Britain’s FTSE 100 erased earlier gains and closed 0.3 per cent lower, as losses in financial and energy stocks coupled with weakness in China-exposed firms weighed, while Vodafone Group shares tumbled after it forecast a big drop in fresh cash flow. The FTSE 250 midcap index eked out a meagre 0.1 per cent gain.

Vodafone shed 7.4 per cent to become the top decliner on the FTSE 100 after the company warned of a €1.5-billion decline in free cash flow this year, while chief executive Margherita Della Valle said she would cut 11,000 jobs over three years. The 7.4 per cent drop marked its worst session in two years.

China-exposed firms, such as insurer Prudential and HSBC, fell 2.4 per cent and 0.9 per cent respectively, after China’s April industrial output and retail sales growth undershot forecasts, suggesting the economy lost momentum at the beginning of the second quarter.

Energy stocks fell 1.2 per cent, tracking lower oil prices, while banks slipped 0.7 per cent after two straight days of gains.

Europe

The pan-European STOXX 600 index closed 0.4 per cent lower, with the retail sector taking the biggest hit. Data showed that the euro zone economy grew by 0.1 per cent quarter-on-quarter in the first three months of the year, with rising employment and a sharp increase in exports boosting the bloc’s trade surplus.

Automakers also dropped 0.9 per cent after weak data from China fuelled concerns about an economic slowdown.

Embracer Group plunged 15.9 per cent after lowering its full-year adjusted earnings forecast. Sonova Holding dropped 10.7 per cent after the Swiss hearing aid maker reported full-year core profit below market expectations.

The telecoms index declined 0.9 per cent with Telecom Italia falling 2.2 per cent on mounting uncertainties over the bidding process for the phone group’s landline grid.

US

The Dow and the S&P 500 fell in the first hours of trading on Tuesday after a dour forecast from Home Depot, while April retail sales data pointed to consumers feeling the pinch from rising prices and interest rates.

The US commerce department reported retail sales rose 0.4 per cent in April, or at half the pace against an expected increase of 0.8 per cent.

Home Depot shed 1.4 per cent, hitting its lowest level in over six months after the company lowered its annual sales forecast. Shares of rival Lowe’s Companies fell 1.1 per cent, while retail giant Walmart slipped 0.8 per cent.

Microsoft rose 1.2 per cent, extending its gains to a second day and boosting the Nasdaq, after winning EU antitrust approval for its acquisition of Activision on Monday.

Additional reporting: Reuters