Europe midday: Investors stay on sidelines ahead of earnings season

European shares retreated from record highs in the opening session of the week on the back of weaker Asian markets.

The pan-European STOXX 600 index had slipped 0.16%, with the UK’s FTSE 100 off 0.26% despite non-essential shops such as hairdressers and gyms reopening for the first time since a national lockdown was imposed in January.

Britain’s blue-chip index was hit by falling commodity stocks, with a 0.9% decline in the Brent crude oil price and a 1.4% slide in copper. The export-heavy FTSE was also hit by a stronger pound, which rose against the dollar and euro.

“The jury is still out judging by Monday’s early share price reactions. Primark owner Associated British Foods slipped 1.7%, Games Workshop fell 2%, WH Smith was down 1.8% and JD Sports retreated 1.4%, the latter despite big queues at its flagship store in London’s Oxford Street before its doors opened," said aid AJ Bell investment director Russ Mould.

“While it is possible that we’ll see plenty of people venturing into the shops today, particularly as it provides an excuse to finally get out of the house, retailers need strong footfall to be sustained for more than just a few days otherwise they face more difficult times ahead. It seems inevitable that we haven’t seen the last of the retail sector casualties.”

“Tech companies in Asia were weak on fears that Alibaba’s $2.75 billion fine for abusing its market dominance could lead to other players receiving antitrust fines. The Hang Seng Tech index fell 1.7%. This threat has been in play for some time and investors shouldn’t be surprised to see the Chinese authorities get heavy."

Investors were also keeping their powder dry ahead of the next corporate earnings season.

In other equity news, shares in budget airlines easyJet and Ryanair fell after HSBC downgraded their stocks to ‘hold’ from ‘buy’.

Italian diagnostics group DiaSorin jumped 8.35% after it said it will acquire US based Luminex Corp for $1.8bn in an all-cash deal.

French utilities Veolia and Suez were both more than 7.5% higher after they agreed a merger deal.