European shares choppy as earnings fail to set trend

Bookmakers in UK hit by restrictions on fixed odds betting terminals (FOBTs)

Traders work on the floor of the New York Stock Exchange  . Photographer: Michael Nagle/Bloomberg

Traders work on the floor of the New York Stock Exchange . Photographer: Michael Nagle/Bloomberg

 

European shares steadied on Tuesday as a batch of company updates failed to set a clear trend and chipmakers were weighed down by a warning of a downturn in orders by Austria-based chipmaker AMS, which supplies Apple.

The pan-European STOXX 600 benchmark ended flat at the end of a choppy day, marginally weighed down after the US 10-year Treasury yield rose above 3 per cent for the first time since 2014.

The rise in bond yields, which investors fear could hurt equities, has been partly fuelled by the spike in crude oil prices, which on Tuesday crossed $75, boosting energy shares.

DUBLIN

The Iseq was down 1 per cent at 6,774. Paddy Power Betfair fell nearly 4 per cent on foot of UK moves to limit the maximum stake allowed on fixed odds betting terminals (FOBTs). Food group Glanbia was up 1.5 per cent at €14.22 ahead of a trading update and AGM on Wednesday. Iseq heavyweight Ryanair was hit by higher oil prices, which weighs on the airline industry, falling 1 per cent to €15.48.

The slide in Independent News & Media’s (INM) share price, following the drip feed into the market of further allegations of corporate governance breaches, was temporarily halted with shares rising 3 per cent to 9 cents.

AIB, however, slid 0.5 per cent to €5.22 while building materials giant CRH fell 1.6 per cent to €28.44. Bot companies will publish trading updates on Wednesday.

LONDON

The FTSE 100 rose on Tuesday, supported by Shire’s shares as the company received a revised takeover proposal from Takeda. London’s blue-chip index closed the day up 0.36 per cent or 26.53 points at 7,425.4 points.

Shire was the biggest riser on the FTSE 100 after Japan’s Takeda tabled another offer for the pharmaceutical giant ahead of a deadline to reach a takeover deal. The company said on Tuesday it received a fifth proposal from Takeda after the firm put forward a £44 billion offer last week. Shire’s shares closed the day 3.42% higher at 3,930p.

Shell and BP rose by 1.24 per cent or 32p and 2.30 per cent or 12p respectively as oil prices rose above 75 US dollars per barrel during the day’s trading. However, towards the end of the session, Brent crude was down 0.36 per cent to $74.74 per barrel.

In UK stocks, bookies were hit following reports suggesting the government will cut the maximum stake for fixed odds betting terminals (FOBTs) to £2. The recommendations of a review carried out by the gambling regulator earlier this year said the maximum stake should be set at or below £30. But reports suggest Chancellor Philip Hammond has opted to accept advice from campaigners for a more drastic reduction to £2. Shares in William Hill tumbled 12.7 per cent or 42.7p, PaddyPower was down 4.85 per cent or 355p and Ladbrokes owner GVC shed 6.02 per cent or 58.5p by the close of play.

Anglo American said it is set to take a profit hit of up to $400 million after the mining giant was forced to suspend production at its iron ore mine in Brazil because of a cracked pipe.

EUROPE

AMS shares tumbled 9 per cent after reporting lower orders from one of its main customers, which it did not name, also hitting shares in other companies in the sector.

Germany’s SAP rose 3.5 per cent after saying it was gaining ground on competitors Salesforce and Oracle in the cloud and that its margin recovery was firmly on track. The banking sector, down 0.1 per cent, got little support from the results of Santander, the euro zone’s biggest bank by market value, whose shares fell 3.2 per cent after profits in the UK disappointed.

Deutsche Bank however added 4.2 per cent. It may spell out strategy changes for its investment bank on Thursday along with first-quarter earnings. Swiss bank UBS had failed to cheer up investors on Monday after its flagship wealth management business missed forecasts. In the auto sector, truck maker AB Volvo fell 4.6 percent after it warned that its supply chain was coming under pressure, while results from automaker PSA Group disappointed, weighing on its shares. Tyre maker Michelin rose 1.6 per cent, recovering from initial losses that followed a fall in first-quarter revenue. Dutch paints and coatings maker Akzo Nobel lost 2.3 per cent after reporting a larger-than-expected 28 percent drop in first-quarter core profit.

NEW YORK

Wall Street dropped sharply on Tuesday as concerns over marquee companies warning of higher costs were exacerbated by the benchmark US 10-year Treasury yield piercing the 3-percent level for the first time in four years. Google-parent Alphabet sank 4.9 per cent, erasing all its gains for the year, as investors focused on the company’s rising expenses and shrinking margins rather than a profit beat.

Caterpillar sank 6.6 per cent after it warned of the impact of steel price hikes on its business. The stock had gained as much as 4.6 per cent earlier on a strong set of quarterly results and full-year outlook. The 10-year yield, a benchmark for global borrowing costs, has been driven steadily higher by a combination of concerns over inflation, growing debt supply, and rising Federal Reserve borrowing costs. - Additional reporting Reuters