Europe Shares Flat as Carrefour Falls 12.5 Percent on France Unrest
The STOXX 600 held at 638.80 points as strong results from Randstad and EssilorLuxottica offset a sharp fall at Carrefour, which cut its outlook and blamed riots, looting and curfews.
Key points
- European shares struggled for direction on Wednesday, Oct. 21.
- The national picture was mixed at the open.
- Randstad jumped 11.6 percent.
European shares struggled for direction on Wednesday, Oct. 21. Concern over violent unrest in France offset a strong set of company results, and the pan-European STOXX 600 index was flat at 638.80 points at 0713 GMT.
The national picture was mixed at the open. The CAC 40 in Paris rose 0.14 percent, Italy's MIB rose 0.31 percent, Germany's DAX fell 0.12 percent, and the FTSE 100 in London fell 0.16 percent.
The winners
Randstad jumped 11.6 percent. The recruitment firm reported organic revenue growth of 3.9 percent for the third quarter, well ahead of the 2.9 percent average forecast from analysts.
EssilorLuxottica rose 11.1 percent. The eyewear group reported a 7.2 percent increase in third quarter revenue at constant exchange rates, beating expectations.
The faller
Carrefour dropped 12.5 percent. The French supermarket chain cut its annual earnings forecast and said riots, looting and curfews had raised costs and disrupted trading at its stores.
That one line in a results statement puts a price on the unrest. France has run curfews and protest bans through a second week of disorder that began over school funding and the cost of living. Stores close early under curfew. Deliveries get harder. Security and repair bills rise. Carrefour is the first big retailer to say in numbers that the disorder is hitting trade.
Why it matters
The unrest has added to concern about France's weak public finances and slowing growth. The country's 10-year bond yield touched 5 percent this week, its highest since 2002, in a story covered separately on this site. A flat index hides a split market: companies selling results did well, and the company selling groceries to France did not.
British data also weighed on London. Inflation rose more than expected last month, and this site reported UK inflation at 3.5 percent with public debt past 3 trillion pounds. The numbers lift expectations that the Bank of England could raise interest rates at its November meeting.
What happens next
Earnings keep coming through the week, and traders will keep one eye on France. If more retailers follow Carrefour and put riot costs into their outlooks, the unrest stops being only a political story and becomes a profits story. The Bank of England's November meeting is the next fixed date for the rates side of the trade.