Europe Stocks Little Changed as Munich Re Falls, Barclays Gains
European equities fluctuated, inching lower for the fourth time in five days, with investors increasingly skeptical about the recent rally scrutinizing earnings releases.
Munich Re fell 3.5 percent, dragging insurers lower, after forecasting lower profit than previously expected. Barclays Plc climbed 3 percent as revenue at the investment bank fell less than expected. Adidas AG jumped 6.8 percent after raising its annual profit forecast as consumers spend more before this year’s Euro soccer tournament. Statoil ASA added 3.1 percent after Norway’s biggest oil company unexpectedly posted a profit, leading energy producers to the biggest gain among industry groups.
The Stoxx Europe 600 Index dropped less than 0.1 percent at 10:04 a.m. in London, briefly falling as much as 0.4 percent as the euro climbed against the dollar. With the rebound since the February low losing steam and the earnings season ongoing, investors are keeping a close eye on central-bank policy. The Federal Reserve announces its rate decision after the close of European markets today, while the Bank of Japan will release it tomorrow.
“People are questioning valuations because earnings growth just isn’t there,” said Francois Savary, chief investment officer at Prime Partners in Geneva. “It will be very difficult for stocks to gain more ground, especially with the higher euro. There’s also the issue of Fed credibility, and the fact that Yellen is looking at international events as a reason to not raise rates.”
The rebound in European equities since their February low has stalled amid growing concern over profit growth — now analysts project a decline for 2016 — and economic data that have been missing forecasts. The Stoxx 600 has lost 5.1 percent this year through Tuesday, led by slumps at Italian banks on concern over bad loans. Still, its valuation of about 15 times estimated earnings remains above its five-year average.
Among other stocks moving on corporate news, Total SA added 2 percent after posting a smaller-than-projected drop in quarterly earnings, helped by cost cuts and rising production. Banco Santander SA added 2.6 percent after net income beat analysts estimates. Airport operator Aena SA rose 4.4 percent after reporting an increase in earnings.
Societe BIC SA sank 6.1 percent after reporting a decline in margins. PSA Group, the maker of Peugeot and Citroen cars, fell 1.6 percent after saying quarterly sales declined. Swedish lender SEB AB declined 3.5 percent after posting a bigger loss than projected.
Greek stocks fell the most among western-European markets, with the benchmark ASE Index down 3.8 percent. Prime Minister Alexis Tsipras will seek a meeting of euro-area leaders to resolve disagreements between the government and creditors, bringing back memories of last year’s drama when a quarrel over bailout terms almost pushed the country out of the currency bloc.
Spain’s IBEX 35 Index was among the region’s biggest gainers, thanks to Santander and Aena, even as the nation’s king called for a new general election after parliament failedto choose a prime minister for the first time in the country’s democratic history.
Source: Bloomberg
