European stock rally pauses after mixed corporate results
Shares edge lower after rally that propelled both Britain’s FTSE 100 and Germany’s DAX to record highs
European markets are in retreat after indices such as Germany’s DAX reached record highs. (Photgraph: Reuters)
European shares edged lower on Wednesday as mixed corporate results halted the rally that had propelled both Britain’s FTSE 100 and Germany’s DAX to record highs.
Shares in British engineer Weir Group featured among the top losers, down 10 percent, after it warned falling oil prices would lead to a significant reduction in its 2015 revenue in 2015.
French steel pipe maker Vallourec sank 4.9 per cent after saying it plans to cut 1,400 jobs in 2015, following a drop in demand from oil company customers. At 1128 GMT, the FTSEurofirst 300 index of top European shares was down 0.2 per cent at 1,540.04 points, retreating from a seven-year high hit on Tuesday.
European equities markets remained optimistic, though. Investors expected a boost from the European Central Bank’s asset-buying programme, known as quantitative easing, which isdue to start next month. “With the European Central Bank’s quantitative easing coming soon, European indexes should continue to rally for a while,” said Mirabaud Securities senior equity sales trader John Plassard in Geneva.
Some of the recent outperformers on the QE trade, such as European auto makers and Italian banks were hit by profit taking on Wednesday after rallying around 30 percent since early January.
Europe’s second-biggest insurer AXA rose 2.7 per cent after posting a 12 per cent increase in 2014 net profit and voicing confidence in its cost-cutting target for this year.
Danish shipping and oil group A.P. Moller-Maersk gained 6.7 per cent after the group said it would sell its 20 per cent stake in Danske Bank with the anticipated proceeds of about $5.5 billion going to shareholders.
France’s Safran gained 3 per cent after the group predicted profit growth this year as it posted stronger-than-expected 2014 earnings, led by sales of spare engine parts and record production rates.
So far in the earnings season, 63 per cent of STOXX 600 companies have reported results, of which 55 per cent have met or beaten profit forecasts. Overall, fourth-quarter earnings are expected to grow by 19.5 per cent, according to Thomson Reuters I/B/E/S, which would be Europe’s best season in 3-1/2 years.