European Stocks Ride Election Wave with Mixed Reactions

Europe's STOXX 600 inched up 0.1% on Tuesday, driven by industrials while investors monitored U.S. election outcomes. Italian markets fell mainly due to Ferrari's dropping shares. Healthcare declined over AstraZeneca's fraud allegations in China. The tight U.S. election contest between Harris and Trump influenced market sentiment.

On Tuesday, Europe's STOXX 600 saw a slight increase, closing 0.1% higher, primarily led by a surge in industrials as investors processed an array of disappointing earnings reports and focused closely on the tightly fought U.S. presidential election.

While most European markets finished in the green, Italy's FTSE MIB lagged behind, battered by a 7.1% decrease in Ferrari shares following a sharp decline in third-quarter car shipments. The industrial sector climbed more than 1% after Britain's Melrose Industries received a boost from Citigroup's upgraded free cash flow forecast, propelling the aerospace components supplier up by 4%.

However, the healthcare sector dipped around 2% due to reports linking senior executives at AstraZeneca's China unit to a major insurance fraud case, leading AstraZeneca shares to plummet over 8%, marking their steepest fall since March 2020.

As investors remained fixated on the U.S. elections, Democrat Kamala Harris and Republican Donald Trump competed in what many market observers called a close contest, with betting odds favoring Trump. Ben Ritchie of abrdn noted that a Trump victory could benefit U.S. equities but negatively impact European stocks. On the other hand, a win for Harris might elicit a more tempered market reaction.

The day also saw other significant movements, including the 12.2% dip in Vestas shares post a weak third-quarter profit report, and a 13.5% drop in Schroders after announcing a net outflow of funds. Conversely, shares of Syensqo rose by 7.2% following plans to streamline its workforce and revise its profit forecast upward.

(With inputs from agencies.)