- Remy Cointreau down after refraining from forecasting sales
- Analysts estimate profits at Stoxx 600 members to fall in 2016
Skepticism over the European Central Bank’s stimulus program weighed on the region’s shares for a second day, taking their valuations to the lowest levels since July 2015 relative to global stocks.
Europe’s shares have been lagging behind in a rally that lifted the MSCI All-Country World Index to a six-month high and sent the S&P 500 close to a record. While the ECB began buying corporate bonds on Wednesday, investors remain unconvinced the central bank’s stimulus program will succeed in reviving economic growth.
The Stoxx Europe 600 Index fell 1 percent at the close, with more than 500 of its members down. Companies in the benchmark gauge trade at 14.9 times estimated earnings, 4.3 percent lower than the MSCI All-Country World Index and 12 percent below the multiple for the S&P 500.
“It’s just about reassessing where we are now,” said Peter Dixon, global equities economist at Commerzbank AG in London. “There’s also a lot of skepticism regarding Europe’s ability to generate any growth at all. A lot of people don’t think that the ECB buying bonds will make any real difference to the economy.”
The Stoxx 600 has struggled to keep its rebound going after rising as much as 16 percent from its February low. It has been trading in a range of about 20 points since March, despite signs that Europe’s economy is improving. The gauge is down 6.7 percent this year.
Earnings remain a key concern for investors. While a Citigroup Inc. index tracking the number of corporate profit upgrades versus downgrades turned positive for the first time since last year, analysts are still projecting Stoxx 600 members will post a 3.2 percent decline in net income in 2016.
Among stocks moving on corporate news, Seadrill Ltd. sank 10 percent after saying it will issue 7.5 million new shares in exchange for debt. British manufacturer Rolls-Royce Holdings Plc lost 2 percent after Chief Executive Officer Warren East told employees that the company needs to step up efforts to recover a waning delivery schedule.
Remy Cointreau SA slid 3.3 percent as it said it won’t give a sales forecast for the next fiscal year, citing volatility in all regions. Essentra Plc tumbled 28 percent after the supplier of plastic products said it probably won’t be able to achieve the financial results it predicted in February.
Sky Plc rose 2.9 percent after winning the rights to show the majority of Germany’s Bundesliga matches.