- Telecom Italia rallies after CEO said to be reviewed
- Evonik leads Stoxx 600's decline from one-month high
A five-day winning streak in European stocks ran out of steam, with Whitbread Plc and Evonik Industries AG among the biggest decliners after earnings.
Whitbread dropped 6.2 percent after comparable sales at its Premier Inn and Costa coffee-shop chains trailed projections. Evonik tumbled 12 percent after the German chemical maker forecast earnings that missed estimates. Commodity producers climbed for a fifth day, tempering losses in the Stoxx Europe 600 Index. The benchmark slid 0.5 percent at the close of trading.
Roche Holding AG, HSBC Holdings Plc and five other companies traded without their right to dividend today, shaving 0.5 point off the European gauge. The biggest five-day surge in banks since 2011 pushed the Stoxx 600 to a one-month high yesterday. It has rebounded 12 percent since a Feb. 11 low, also boosted by commodity and energy producers.
“It’s been a pretty decent couple of weeks and there didn’t seem to be anything to prompt the rally in terms of data,” said Ben Kumar, an investment manager at Seven Investment Management in London. His firm oversees about $13 billion. “It’s possible people are taking profit and pausing for breath before the ECB meeting next week.”
Investors are awaiting policy cues from central banks this month, after concern over global-growth prospects, a deepening oil rout and bad bank loans dragged the Stoxx 600 into a bear market earlier this year. European Central Bank officials meet on March 10, after President Mario Draghi in January signaled the possibility of more stimulus. U.S. payrolls data are due tomorrow, before the Federal Reserve’s March 16 rate decision.
Global equities should be cut to underweight from neutral in global asset allocation portfolios as growth, earnings and the risk of recession haven’t improved, JPMorgan Chase & Co. strategist Jan Loeys wrote in a note. The focus of risk is now on the U.S. and away from China, he said. A report today showed growth in U.S. service industries slowed for a fourth straight month, prompting the first job cuts in two years.
Among stocks active on corporate news, Telecom Italia SpA rallied 5.7 percent after people familiar with the matter said Chief Executive Officer Marco Patuano’s position is being reviewed by Vivendi SA.
Cobham Plc slipped 7.6 percent after reporting worse-than-forecast earnings. Aggreko Plc and Admiral Group Plc gained 9 percent or more after profit beat analysts’ projections. Arkema SA rose 8.8 percent after posting full-year earnings that topped its forecast.
Stoxx 600 miners extended their gains since a 2003 low reached in January to 39 percent, making them the most expensive relative to the broader gauge since 2009. They are the best performers in the benchmark this year.