European stocks lower ahead of ECB meeting

Big 5

Stock markets in Europe traded lower on Thursday morning as investors waited to hear from European Central Bank President Mario Draghi and digested fresh corporate earnings.

The pan-European Stoxx 600 was 0.35 percent lower with most sectors trading in negative territory.

Basic resources and media stocks were the worst performers in mid-morning trade. The former was impacted by lower commodity prices with Chinese iron ore futures down for a third session out of four.

Meanwhile, the world’s largest add firm WPP said Thursday that sales were held back in North America, where the firm lost key contracts. Nonetheless, the advertising group reported a 0.8 percent increase in like-for-like net sales in the first quarter. Its shares moved slightly lower in early deals.

Insurance stocks were also heading south in mid-morning trade on earnings and rating reviews. Scor reported a lower net income at 140 million euros ($152 million). Credit Suisse put the insurer Legal & General on a under-performing rating. The firm dropped 5 percent, becoming one of the worst performing stocks in mid-morning trade. Moody’s also warned Wednesday that low-interest rates posed risks to global insurance firms.

Looking at individual stocks, the Finnish oil refining firm Neste was at the bottom of the European benchmark, down by nearly 6 percent. This was after the company reported weak margins in renewable and retail products.

On the other hand, international private hospital group Mediclinic rose to the top of the benchmark, up by 18 percent. The London-based group stands to benefit as the Abu Dhabi health authority scraps a 20 percent co-payment requirement at private hospitals.

Furthermore, the Norwegian seabed-to-surface engineering firm Subsea rose nearly 8 percent after reporting an increase in revenue for the first quarter.

Draghi speech, banks report earnings

Draghi is expected to announce the ECB’s latest monetary policy decision at lunchtime this Thursday. Analysts do not foresee any change in policy but say there could be a change in tone. Meanwhile in Japan, the central bank has raised its economic forecasts but kept its policy unchanged.

Corporate earnings are also a big focus this Thursday.

Deutsche Bank reported lower-than-expected revenue for its first quarter, mainly driven by a negative impact of credit spreads, but it doubled its net profit to 575 million euros ($626 million). It dropped 3.2 percent in mid-morning deals.

On the other hand, the Spanish lender BBVA beat expectations on Thursday when announcing a net profit increase of 1.2 billion euros ($1.31 billion) compared to 709 million a year ago. However, the bank fell 1.9 percent in mid-morning trade.

The Nordic bank Nordea reported first-quarter operating profit of 1.1 billion euros ($1.2 billion) in line with market expectations. It added that it was looking into moving its headquarters from Sweden. Its shares were up by 1 percent.

Lloyds has surprised analysts on Thursday while reporting steady profit figures of 2.1 billion pounds ($2.7 billion). Market observers feared the bank would be hit by the U.K.’s decision to leave the European Union. Its shares jumped 3.3 percent.

The German airline Lufthansa announced earnings before interest and tax of 25 million euros ($27 million) compared to a loss of 53 million last year. This was the first time the airline reported profits in the first quarter of the year since 2008. Its shares dropped 2.7 percent.

The U.K.’s housebuilder Taylor Wimpey said Thursday that it had a good start to 2017 on positive customer demand and good mortgage availability. Its total order book value rose by 2 percent to about £2.210 million. The firm was slightly higher in mid-morning deals.

Data

Economic sentiment reached a near 10-year high in April, as confidence improved in all sectors and inflation expectations dropped. The European Commission’s monthly survey rose to 109.6 from 108.0 in March, the highest figure since August 2011.

In the U.S. initial jobless claims figures will be released.

Source: CNBC

Comments
Loading...