Europe stocks choppy; Fed, BOJ, earnings in focus
European stocks seesawed Thursday as markets digested the latest monetary policy decision from the U.S. Federal Reserve, a raft of earnings and look ahead to the latest decision from the Bank of Japan.
The pan-European STOXX 600 edged down 0.3 percent.
Credit Suisse rallies
Earnings are in focus for European investors Thursday. Credit Suisse reported a surprise profit for the second quarter of 2016 sending its shares higher, while French bank BNP Paribas was also higher after posting better-than-expected second-quarter profit, even as its retail bank struggled.
Elsewhere in the banking space, Lloyds reported that first half pre-tax profit more than doubled year-on-year but announced further cost-cutting measures that will see 3,000 jobs cut, sending shares sharply lower.
Deutsche Bank shares were trading lower after both Barclays and JPMorgan cut their price target for the stock.
But Banca Monte dei Paschi di Siena (BMPS) led the Italian banks higher ahead of the European Central Bank stress test results on Friday evening. Italy’s third-largest lender has asked at least eight investment banks to guarantee a 5 billion euro ($5.5 billion) cash call, Reuters reported, citing a source.
Meanwhile, Unicredit was in negative territory after Reuters reported it is considering a 5 billion euro cash call and a sale of its Bank Pekao and FinecoBank units to boost capital.
Shell drags down oil stocks
In the oil and gas space, Shell’s second-quarter earnings on a current cost of supplies (CCS) basis attributable to shareholders (excluding identified items) was $1 billion, down from $3.8 billion in the same period last year, a 70 percent fall. The news sent shares 4 percent lower.
Meanwhile, shares of France’s Total was trading roughly flat after it said second-quarter adjusted net income was down 30 percent year-on-year to $2.2 billion, but noted on a quarter-on-quarter basis, it actually rose.
Finland’s Neste reported second-quarter core earnings that beat analyst expectations, sending shares surging over 8 percent.
Italian oil services company Saipem tanked nearly 8 percent after it cut its profit guidance for the year on the low oil price.
Diageo shares sober on results
Among the other earnings, drinks giant Diageo reported full-year 2016 preliminary results on Thursday in which it said net profit was £2.24 billion ($2.95 billion) on full-year sales totaling £10.49 billion. Shares were trading flat.
French retailer Carrefour said first-half underlying operating profit rose 5.3 percent, but saw sales fall in China. Still, shares of the firm were trading slightly higher.
Pharma giant Astrazeneca reported a 21 percent year-on-year decline in core operating profit, but shares were mildly higher.
Shares of British broadcaster Sky were higher after it said full-year profit rose, while Thomas Cook shares rallied over 6 percent after it cut its profit outlook for the year but said it still plans to pay a dividend.
Rolls Royce posted an 80 percent decline in first-half profit but stuck to its guidance for the year, sending shares higher, while Logitech was also near the top of the STOXX 600 after reporting strong first quarter sales.
Meanwhile, Apple supplier Dialog Semiconductor sat near the bottom of the STOXX 600 after its second quarter operating profit plummeted and it cut its guidance for 2016 sales.
Auto sector hits brakes
France’s Renault dragged the auto sector down despite reporting a 13.5 percent surge in first-half sales.
Volkswagen shares were also sharply lower after reporting a 56.5 percent decline in second-quarter pre-tax profit.
Central banks in focus
European markets on Thursday are also digesting the latest statement from the Federal Open Market Committee and keeping an eye on the start of a two-day policy meeting of the Bank of Japan (BOJ).
As expected, the Federal Reserve kept interest rates unchanged while policymakers noted the labor market has “strengthened” and that “near-term risks to the economic outlook have diminished.”
Analysts were divided on whether the statement pointed to a September rate hike, however, and U.S. stocks closed mixed Wednesday after the Fed statement and major earnings reports.
Meanwhile in Asia, markets traded mixed on Thursday, ahead of another earnings-heavy day and the start of the BOJ meeting.
Influential Japanese business daily Nikkei had previously reported that BOJ officials were looking at multiple stimulus proposals ahead of the central bank’s policy meeting. Meanwhile on Wednesday, Japanese media agency Jiji reported that Prime Minister Shinzo Abe was preparing a stimulus package worth 28 trillion yen ($265.30 billion), which exceeds initial estimates of around 20 trillion yen-worth of potential stimulus.
Source: CNBC
