Fed maintains dovish stance; Earnings in focus

European markets pulled back Thursday after a slew of major corporate earnings painted a mostly disappointing picture.

The pan-European Stoxx 600 slipped 1.5% by early afternoon, with autos shedding 4% on the back of weak earnings from Volkswagen and Renault as all sectors and major bourses traded in negative territory.

European stocks received a mixed handover from Asia Pacific, where markets struggled for direction after the U.S. Federal Reserve left interest rates unchanged.

Following its two-day monetary policy meeting, the Federal Open Markets Committee also vowed to maintain its bond purchases and the array of lending and liquidity programs aimed at shoring up the economy amid the coronavirus fallout. The central bank warned that although activity had picked up from its trough, the U.S. economy is still well below pre-pandemic levels and would be heavily dependent on the course of the virus.

Some market focus also remains attuned to the state of the pandemic, with Brazil reporting a daily record 69,000 new cases on Wednesday, while deaths from the virus in the U.S. have risen for three consecutive weeks and fresh spikes have been seen parts of China, Australia and mainland Spain.

Corporate earnings will be high on investors’ agenda Thursday. Credit Suisse reported a 24% increase in net income before the opening bell and made additional provisions amid a “challenging economic environment,” along with announcing several structural changes. The Swiss lender’s shares slipped 1% by early afternoon.

Volkswagen cut its dividend after reporting a first-half operating loss of 800 million euros ($940 million) amid a 27% plunge in vehicle deliveries due to the coronavirus pandemic, while French rival Renault slumped to a 7.3 billion euro net loss in the first half of the year. Volkswagen and Renault shares both tumbled more than 7%.

French lottery operator FDJ jumped more than 14% after positive first-half results, while AB InBev shares climbed more than 5% after the Belgian brewer posted a better-than-expected trading update.

At the bottom of the European blue chip index, U.K. auto retailer Inchcape fell more than 10%.

British domestic bank Lloyds fell 8% after slipping to a pretax loss on the back of a sharp increase in credit loss provisions due to the pandemic, while Spain’s BBVA slid 9% after reporting a 50% fall in net profit.