Weak data weighs on European shares, bank stocks rise after results
Reuters
Published May 15, 2018 09:56
Weak data weighs on European shares, bank stocks rise after results
By Helen Reid
LONDON (Reuters) - European shares slipped on Tuesday after weak data from China and Germany added to a spate of less encouraging news on the global economy, but the banking sector (SX7P) offered a ray of light after strong results from Austria's Raiffeisen Bank.
The pan-European index (STOXX) eased 0.1 percent while Germany's DAX (GDAXI) declined 0.2 percent after Europe's biggest economy reported first-quarter growth slightly slower than expected.
The earnings season was nearing its close with more than three-quarters of MSCI Europe companies having reported first-quarter results.
"Generally it's been slightly underwhelming on sales numbers and in line on earnings numbers," said Rory McPherson, head of investment strategy at Psigma Investment Management.
"European banks have tended to perform quite well and have picked up a lot recently with some good earnings," he added.
Indeed, on Tuesday bank stocks led the way.
An 81 percent increase in first-quarter net profit sent Raiffeisen shares up, while Commerzbank (DE:CBKG) led the DAX after reporting quarterly pre-tax profit ahead of analysts' expectations.
Credit Agricole (PA:CAGR) added to the optimism around banking stocks. The French bank's shares had fallen at the open but recovered to trade up 1.3 percent after quarterly profit fell short of expectations.
Italy's FTSE MIB (FTMIB), which is heavily weighted to the financial sector, rose 0.4 percent, outperforming European peers.
Italy's government-forming efforts hid a speedbump late on Monday as 5-Star and League parties won more time to decide on a prime minister.
Dealmaking, which has been rife in European markets this year, continued with Worldline (PA:WLN) agreeing to buy the payments arm of Swiss stock exchange operator SIX for $2.75 billion.
Shares in the French payments company jumped 4.8 percent, while Atos (PA:ATOS), which has a majority stake in Worldline, rose 2 percent.
Shares in Switzerland's Temenos (S:TEMN) jumped 4.5 percent. The banking software firm was boosted by dealmaking in the sector and by its addition to MSCI's Switzerland index, traders said.
Overall, price reaction to earnings numbers has been muted, Morgan Stanley (NYSE:MS) analysts said, with earnings misses tending to have a more marked impact.
"You tend to need good guidance as well as beats to warrant good stock performance, which is to be expected nine years into a bull market," said Psigma's McPherson.
Get The App
There was no shortage of fallers after results on Tuesday.
Thyssenkrupp (DE:TKAG) shares dropped 5 percent after the German steel-to-submarines group reported a surprise loss at its Industrial Solutions business.
Meanwhile Iliad (PA:ILD) shares sank 17 percent to the bottom of the STOXX after a management reshuffle and weak first-quarter results.
French satellite firm Eutelsat (PA:ETL) also tumbled 8.7 percent after warning it could fall short of its full-year revenue target, and Danish jewellery maker Pandora (CO:PNDORA) fell 9.2 percent on lower than expected profit due to a slowdown in China.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.