European shares retreat as HSBC weighs; France protests keep investors wary

European Shares Slip After HSBC Miss; France Protests, ECB Move Eyed by Investors

Market Overview and Key Drivers

By Avinash P

Oct 27 (Reuters) - European shares slipped on Tuesday, as disappointing earnings from HSBC dragged the benchmark lower despite a slew of other encouraging corporate results.

HSBC Earnings Disappoint

Results from HSBC, Europe's largest bank, bucked a recent trend of strong performances in the banking sector that increased investor expectations despite rising inflationary concerns.

Shares of the London-based bank fell nearly 7%, touching a six-month low, after its revenue missed estimates, in part due to slower growth at its wealth business, dragging the banking index down 1.1%. The UK's FTSE 100 was down 0.8%.

The pan-European STOXX 600 index was down 0.1% at 640.07 points by 0920 GMT, after climbing nearly 0.8% on Monday.

"The earnings results, generally speaking, have been pretty solid," said Richard Flax, chief investment officer at Moneyfarm.

However, there is some wariness among equity investors about assuming the very strong growth results seen so far will continue, he added.

France: Protests and Economic Impact

Student and Union Protests

In France, student leaders vowed to go on protesting despite government concessions on education, as the movement spreads to unions and other activists, stokes unrest and deepens the economic damage.

Consumer Confidence and Market Reaction

French consumer confidence fell by five points to 80 in October, its lowest level since June 2013, data showed on Tuesday.

French equities were flat on Tuesday after falling more than 2% last week as protests rattled euro zone's second-largest economy. 

Other Notable Movers

Corporate Earnings Updates

Among other movers, Novartis raised its full-year core operating income guidance, sending the shares of the Swiss drugmaker up 1.7%.

SIG Group shares jumped 9.4% after the packaging solutions provider lifted its full-year EBIT margin guidance.

Sector Performance

Technology shares traded 0.7% higher, tracking global optimism in the wake of Anthropic's IPO filing, while miners gained 0.9% tracking higher base metal prices.

BE Semiconductor Industries rose 8.5% after larger US peer Applied Materials said it had increased its stake in the Dutch semiconductor packaging equipment maker to 20%.

Central Bank Decisions in Focus

European Central Bank Policy Outlook

Investor focus will also turn to the European Central Bank's policy decision due on Thursday, with economists polled by Reuters expecting a pause, with a 70% chance it tightens rates in December, according to LSEG-compiled data.

Interest Rate Hikes and Inflation

The central bank has hiked interest rates twice in 2026 to 2.50%, after the Iran conflict sent oil prices soaring and stoked price pressures.

US Federal Reserve Decision

The US Federal Reserve's rate decision is also due on Wednesday.

(Reporting by Avinash P in Bengaluru; Editing by Mrigank Dhaniwala and Harikrishnan Nair)