European Shares Tumble Amid Lacklustre Earnings and Luxury Stock Slumps

European shares declined on Wednesday, impacted by underwhelming earnings results and a drop in luxury stocks like LVMH. The pan-European STOXX 600 index fell by 0.8%, with significant losses in the personal and household goods sector. Technology shares also dipped, influenced by poor performance from U.S. tech giants Tesla and Alphabet.

European shares fell on Wednesday, dampened by luxury stocks after dour results from LVMH weighed on sentiment, and as a raft of lacklustre corporate earnings added to the sombre mood.

The pan-European STOXX 600 index moved 0.8% lower at 511.24 points by 0830 GMT, led by a 1.8% slump in the personal and household goods sector. Shares of the world's largest luxury goods firm LVMH fell nearly 5% after it missed estimates for second-quarter sales as Chinese shoppers reined in their spending habits.

Shares of Christian Dior, part of the group's fashion and leather goods division, fell 5.3%. The French benchmark CAC 40 index, which houses both retail giants, lost 1.6% and underperformed among regional bourses.

"Companies that do have large exposures to China - we're going to see investors heading into earnings with caution. Seeing a bit of disjointed earnings season and that's leaving investors concerned and a lack of drive in equity markets," said Daniela Hathorn, senior market analyst at Capital.com. Technology shares shed 1%, with Temenos down 3.5% after the Swiss banking software firm lowered its annual outlook, citing an impact of short-seller Hindenburg Research's report on its half-year performance.

Across the Atlantic, dismal results from U.S. tech giants Tesla and Alphabet also dented sentiment. "We're seeing a spillover effect into Europe after results have been weak for Tesla. Alphabet performed relatively well but if you nitpick these earnings, you see some areas where it falls short and investors are becoming a lot more selective," Hathorn added.

Earnings season in Europe and the U.S. has kicked off to a rocky start, with the STOXX 600 wavering amid a whirlwind of mixed earnings reports, swinging on both sides with each passing update. Meanwhile, HCOB's preliminary composite Purchasing Managers' Index data showed growth in Euro zone business activity stalled this month as a tepid expansion in the bloc's dominant services industry failed to offset a deeper downturn among manufacturers.

Among other stocks, Iveco Group slumped 12.6% after the Italian truck and bus maker's operating profit fell 4% in the second quarter. Deutsche Bank lost 6.7% after Germany's largest lender posted its first loss in four years in the second quarter.

On the bright side, British consumer goods giant Reckitt Benckiser gained 3.2% after it planned to exit a portfolio of home care brands by the end of 2025.

(With inputs from agencies.)