The Ibex 35 and Europe’s major markets fell as investors weighed AI spending against high earnings expectations. Puig outperformed after Givaudan reported fragrance growth.
On October 13, investors were asking how quickly heavy spending on AI infrastructure might pay off, and which companies would capture the returns. Reuters reported those concerns alongside worries about market concentration and European indices’ reliance on a small group of technology companies. The Ibex 35 also finished lower, with losses spread across many of its main constituents rather than driven by one sharp fall.
Puig bucked the decline. Shares in the Spanish fragrance and beauty group led the Ibex after Swiss rival Givaudan reported solid fragrance growth, prompting investors to consider whether Puig’s third quarter might beat expectations.
Givaudan reported January-to-September sales of 5.89 billion Swiss francs, up 2.6% year on year. Organic growth was 5.2%, and revenue topped the AWP analyst consensus of 5.78 billion francs. Comparable sales in its Fragrance & Beauty division rose 8.8% to 3.15 billion francs. Fine fragrances grew 15.3%; functional fragrances increased 9.3%. Fragrances account for more than 70% of Puig’s revenue, making the segment central to hopes that its shares could move closer to their IPO price.
Sabadell and Colonial were also among the session’s stronger Ibex performers. ACS and Rovi were among the weakest, each falling by more than 1%.
The pressure reached beyond Spain. The Dutch AEX was Europe’s worst-hit index as chip-equipment makers ASM International and ASML fell sharply. In the United States, Applied Materials and Micron faced heavy selling. SpaceX was also among the names affected. Reuters cited signs of slowing Chinese demand, including weak third-quarter sales at LVMH, as another source of pressure on European companies exposed to premium consumers.
The decline came ahead of an earnings season with a high bar. FactSet’s October 12 estimate put third-quarter S&P 500 earnings-per-share growth at 29.6% year on year, up from 26.7% projected at the end of June. That would mark the third consecutive quarter with growth above 25%. State Street Global Advisors, citing FactSet estimates as of October 2, put expected revenue growth at 12.3%, compared with 10.9% at the end of June.
Forecasts differ by provider. JPMorgan cited IBES expectations for 24% S&P 500 earnings growth. FactSet and LSEG were near 30% after adjustment for a one-off tax effect in Meta’s results. Excluding Nvidia and Micron, the estimate fell to 15%; for the index’s median company, it was about 8%. JPMorgan’s October 12 consensus for European companies pointed to earnings growth of around 19%, or 11% excluding energy. Median growth was near 9%.
Companies have often beaten forecasts. Over the last five years, quarterly earnings came in 7.5% above expectations on average, and 80% of companies exceeded estimates. Based on that pattern, reported growth could approach 35%, though that remains an expectation, not a result. Forecasts have risen since June, leaving companies with a high bar for results and guidance. Spain’s election campaign remained a separate source of uncertainty.
Geopolitical concerns over the Middle East persisted even as crude prices eased slightly. Gold was flat. Bitcoin advanced and stood 18% higher over the previous six months. The cited analysis attributed limited near-term support for gold to the absence of imminent interest-rate cuts.
