European Stocks Fall as Earnings Misses Offset U.S. GDP
European stocks fell as worse-than-forecast earnings from companies including Schneider Electric SE and Holcim Ltd. outweighed a better-than-expected U.S. growth report, while the U.S. joined Europe in imposing new sanctions on Russia for its role in the insurgency in Ukraine.
Schneider declined the most in more than two years after first-half adjusted earnings missed analysts’ estimates. Holcim Ltd. lost the most since November 2011 after the cement maker posted lower-than-expected profit because of weak emerging-market currencies. Barclays Plc advanced 4.2 percent after posting a return to profit for the second quarter. PSA Peugeot Citroen rallied the most in five months after reporting its first half-yearly profit since 2011.
The Stoxx Europe 600 Index retreated 0.5 percent to 340.44 at the close of trading. The equity benchmark added 0.3 percent yesterday as companies from Ferrovial SA to Next Plc reported better-than-projected results. Still, the gauge yesterday pared gains in the final half hour of trading as the European Union agreed to new sanctions on Russia.
“We have seen a mixed bag of corporate earnings,” said Alessandro Fezzi, a senior market analyst at LGT Bank Schweiz AG in Zurich. “European and Swiss companies have to deal with negative currency effects. Tightened sanctions against Russia are hurting sentiment. Russia has already warned of consequences. I see this conflict not ending very soon, so it will probably cast a shadow on market sentiment for a while.”
European stocks temporarily erased losses after data showed the U.S. economy rebounded in the second quarter more than forecast, following a slump in the prior three months that was smaller than previously estimated. Gross domestic product rose at a 4 percent annualized rate after shrinking 2.1 percent from January through March, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg called for a 3 percent advance.
U.S. companies added 218,000 workers to their payrolls in July, according to a report from the ADP Research Institute. That missed the median analyst call for 230,000.
The Treasury Department introduced measures preventing three Russian banks from selling equity and debt through the U.S. financial system. The government also banned transactions with a state-owned shipbuilder that serves Russia’s oil-and-gas industry and navy.
The Federal Reserve will reduce its monthly purchases for the sixth time to $25 billion from $35 billion when it ends a two-day meeting after European markets close today, according to economists surveyed by Bloomberg.
National benchmark indexes fell in 12 of the 18 western European markets. The U.K.’s FTSE 100 Index dropped 0.5 percent, Germany’s DAX Index lost 0.6 percent, and France’s CAC 40 Index slipped 1.2 percent.
Schneider slid 4.3 percent to 64.52 euros. The world’s biggest maker of low- and medium-voltage equipment posted first-half adjusted earnings before interest, taxes and amortization of 1.5 billion euros ($2 billion). That missed the 1.54 billion-euro estimate of analysts surveyed by Bloomberg as weaker demand from western European utilities and the stronger euro curbed first-half margins.
Holcim, the cement maker that is merging with Lafarge SA, dropped 4.8 percent to 73 Swiss francs after reporting second-quarter net income of 406 million francs ($448 million). That missed the 459.5 million-franc average analyst projection. Holcim said the cost of restructuring and translating weaker emerging-market currencies into francs hurt earnings. Lafarge lost 4.4 percent to 58.54 euros.
HeidelbergCement AG fell 2.8 percent to 57.33 euros. The world’s third-largest maker of cement said second-quarter operating income before depreciation dropped 1.5 percent to 699 million euros as the cost of raw materials in Asia increased. That trailed the average analyst estimate of 714 million euros.
Total SA (FP) lost 4.9 percent to 49.65 euros after the French oil producer said second-quarter profit excluding changes in inventories dropped to $3.2 billion, missing the $3.26 billion estimate of analysts surveyed by Bloomberg. Production slid 10 percent to 2.054 million barrels of oil equivalent a day.
Barclays advanced 4.2 percent to 228.4 pence after posting second-quarter net income of 161 million pounds ($273 million), compared with a loss of 168 million pounds a year earlier, helped by cost cuts and lower provisions. The U.K.’s second-largest bank by assets also reported first-half pretax profit that beat analysts’ forecasts.
Peugeot rose 6 percent to 11.24 euros after reporting first-half operating income excluding one-time gains and charges of 477 million euros as it cut costs, tightened inventory control and introduced new models. That exceeded the 358 million-euro average of analyst estimates compiled by Bloomberg.
Airbus Group NV (AIR) gained 3 percent to 45 euros. The French company said first-half earnings before interest, taxes and one-time items rose to 1.77 billion euros from 1.61 billion euros a year earlier after its commercial plane unit delivered more aircraft.
Almirall SA jumped 7.9 percent to 11.60 euros after AstraZeneca Plc agreed to buy the rights to the Spanish drugmaker’s respiratory medicines for $875 million. AstraZeneca increased 0.8 percent to 4,357.5 pence.
Banco Bilbao Vizcaya Argentaria SA (BBVA) added 1.1 percent to 9.52 euros after posting second-quarter net income of 704 million euros, surpassing the 697.2 million euros estimated by analysts in a Bloomberg survey.
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