Listless trading keeps European stocks flat; Deliveroo tumbles in debut

(Reuters) – European stocks were flat on Wednesday as a 30% slump for delivery company Deliveroo in its London debut took the shine off the fourth straight quarterly rise for the benchmark STOXX 600.

The pan-European STOXX 600 index inched down 0.1% to 430.4 – trading below its pre-pandemic peak of 433.9. The benchmark was on course to end March with a 6.4% rise and the first quarter with an 8% gain.

The German DAX slipped 0.1% after breaching the 15,000-mark for the first time on Tuesday, while the UK’s FTSE 100 fell 0.4%.

Shares in Deliveroo opened well below the initial public offering price, falling as low as 271 pence. The company had priced its IPO at 390 pence per share, giving it a valuation of 7.6 billion pounds ($10.5 billion), less than initially expected.

Continental peers Just Eat Takeaway and Delivery Hero fell 2.0% and 0.3%, respectively.

“The biggest concern is regulation around worker rights. The flexible employee model of Deliveroo’s riders is a huge pillar of the group’s plans for success,” Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, said in a note.

H&M fell 2.8% after the Swedish retailer reported a quarterly loss and said it would not propose a dividend at its annual general meeting.

Economically sensitive sectors such as autos, banks and travel and leisure have been the top performers in Europe this quarter as investors hoped that the reopening of economies would spur growth in these cheap sectors.

“A lot of the winners of 2020 have become losers of 2021 on the recovery aspect,” said Roger Jones, head of equities at London & Capital. “European stocks still have the cyclical element to them that will continue to be favoured by investors.”

Credit Suisse extended declines for a third day, down 2.5%, on worries about its losses linked to the downfall of Archegos Capital, which defaulted on margin calls earlier this week.

Poland’s CD Projekt dropped 13.1% to the bottom of STOXX 600 after its strategy update that included seeking M&A targets disappointed investors.

French business IT services provider Capgemini rose 1.6% after it raised its medium-term margin targets.

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