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Feb 21 (Reuters) – European shares fell on Tuesday ascautious forecast from HSBC weighed down the benchmark STOXX 600index, while an upbeat performance in Engie helped assuage somelosses after the French energy company posted a higher annualprofit.
The continent-wide STOXX 600 index dipped 0.2% inthe first hour of trading.
HSBC Holding Plc, Europe’s biggest bank, fell 1% asits cautious outlook left investors pondering whether a boostfrom higher interest rates may have already peaked, despite itsquarterly profit surging 92%.
Engie SA rose 5% after reporting a sharp increasein profit for 2022, due to higher natural gas and power pricesfollowing Russia’s invasion of Ukraine.
Engie lifted up the European utilities sector indexby 0.4%, making the stock the top gainer for the day.
Developments in Ukraine were back in focus, ahead of aspeech by Russian President Vladimir Putin to set out the aimfor the second year of his invasion.
Investors are now eyeing release of minutes on Wednesdayfrom the U.S. Federal Reserve’s last meeting, which will come ata time when hotter-than-expected U.S. inflation data added toworries that aggressive rate hikes have not yet cooled prices tothe central bank’s satisfaction.
“Since the last FOMC meeting, we’ve had some prettystrong numbers coming out of the U.S. and this is alreadyraising concerns about whether inflation is proving moresticky,” said Stuart Cole, head macro economist at EquitiCapital.
The rate-sensitive technology sector index fell1.1%.
European equities have witnessed a recent bounce, with theSTOXX 600 up more than 9% on better weather conditions, animproving economic outlook and a boost from China’s reopening.
“The weather in January was warmer than usual and this, Ithink, saw consumers venture out more, spending money and takingadvantage of the extra leisure and hospitality services thatbecame available to them.”
Shares of Smith+Nephew jumped 3.6% after theBritish medical products maker forecast a positive annualrevenue growth.
Capgemini dipped 0.4% after the French ITconsulting group forecast slower revenue growth for 2023 onslowing demand for its cloud, data and artificial intelligenceservices.
Also on the radar were February flash composite PMI readingsfrom the euro zone, Germany and France due later in the day.(Reporting by Shreyashi Sanyal in Bengaluru; Editing byNivedita Bhattacharjee and Sherry Jacob-Phillips)
