By Twesha Dikshit and Ragini Mathur
(Reuters) -European shares closed flat on Wednesday as investors weighed the impact of tariffs on corporate earnings after big companies including Adidas, Porsche and Aston Martin flagged potential U.S. price hikes.
Investors were eagerly awaiting the latest round of company outlooks, as these were the first quarterly reports issued since trade uncertainty overwhelmed markets.
The pan-European STOXX 600 index was last at 550.24 points, with the auto sector the hardest hit during the day.
Among European luxury carmakers, Porsche dropped 1.6% and Aston Martin slumped 10% after saying they were lifting prices on their cars exported to the U.S. as a result of tariffs.
Germany’s Mercedes-Benz also slid 3.4% after the carmaker estimated a nearly $420 million tariff impact.
Adidas also warned it may have to hike prices in the United States after reporting U.S. tariffs would add around 200 million euros ($231 million) to costs in the second half. Shares of the sportswear brand plunged 11%.
Still, analysts broadly expect corporate health to improve after the U.S. and EU reached an agreement to reduce tariffs to 15% on EU goods, averting a broader trade war.
“My personal surprise is that (European companies) are adapting very quickly to this new context,” said Alberto Matellan, general manager of MAPFRE’s French asset management subsidiary La Financiere Responsable.
“Maybe tariffs are the trigger to be quicker in adapting to a global shift that was going to happen anyway.”
However, the levies were much higher than earlier this year, and duties on certain sectors such as beverages were still to be decided.
The deal also had market participants reassessing their bets on European stocks after a bumper rally earlier in the year. Wall Street’s S&P 500 has posted the biggest gains for the year, outperforming the STOXX 600.
Meanwhile banks, which are less exposed to trade concerns, were up for a second day and hit their highest since early 2010.
Swiss bank UBS rose 1.1% after reporting its second-quarter profit more than doubled from last year, while HSBC Holdings fell 3.8% on posting first-half pretax profit below estimates.
Chemical stocks were laggards, falling 1.7%. Dutch speciality chemicals maker IMCD was among the top decliners on the index after quarterly results. The firm slumped 12.5% to a more than four-year low.
Amplifon slumped 25.4% to its lowest since early 2019 after the hearing aid maker cut its annual forecast and reported a drop in second-quarter profit.
JDE Peet advanced 10.7% after the Jacobs coffee maker lifted its annual forecasts and said the direct impact of U.S. tariffs would be small.
Markets globally are now awaiting the U.S. Federal Reserve’s policy decision due later in the day.
(Reporting by Twesha Dikshit, Medha Singh, Ragini Mathur and Johann M Cherian; editing by Eileen Soreng and Jan Harvey)
