European Stocks Rise as ECB Holds Rates, Daimler GainsInyoung Hwang
Stocks in Europe rose for a second day as the European Central Bank held interest rates at a record low and companies including Daimler AG and Volvo AB posted earnings that beat estimates.
Daimler gained 2.6 percent after saying quarterly profit surged 45 percent. Volvo climbed 4.6 percent after reporting better-than-forecast operating profit. Alcatel-Lucent SA jumped 9.2 percent after posting its first quarterly profit in two years. Sanofi dropped to its lowest price in a year after estimating profit will increase less than analysts’ predicted.
The Stoxx Europe 600 Index added 1.5 percent to 322.77 at the close of trading, for its biggest advance since Dec. 19. The benchmark has fallen 1.7 percent so far this year amid a selloff in emerging-market currencies, signs of slowing economic growth in China and reduced stimulus from the Federal Reserve.
“After a good correction, markets have gotten a bit better,” Pierre Mouton, who helps oversee $6 billion as a portfolio manager at Notz, Stucki & Cie. in Geneva, said in an interview. “When it comes to the ECB, it was obviously a disappointment, but they won’t resist much longer -- either by lowering interest rates or providing real liquidity to the market. Inflation figures in Europe are really worrying.”
The ECB kept its key interest rate at 0.25 percent today, as forecast by all except four of 66 economists in a Bloomberg survey. Speaking after the announcement, ECB President Mario Draghi reiterated that the bank will take action if the outlook for inflation worsens or money-market turbulence resumes.
Inflation in the 18-nation euro area unexpectedly slowed to 0.7 percent last month, matching the slowest rate since 2009 and less than half the ECB’s goal of just under 2 percent.
The decision to hold interest rates steady came after a rout that has seen about $3 trillion erased from the value of equities worldwide this year.
“The question is whether the emerging markets could drag down the developed world,” Gunther Westen, head of asset allocation and fund management at Meriten Investment Management GmbH in Dusseldorf, Germany, said by phone. His firm oversees $35 billion. “I don’t think that will happen. It may dent economic activity in the euro zone and U.S., but only temporarily. We are sticking to our guns and are still overweight equities.”
In the U.S., a Labor Department report showed jobless claims dropped by 20,000 to 331,000 in the period ended Feb. 1. The median forecast of economists surveyed by Bloomberg called for a decrease to 335,000.
Data tomorrow may show the number of people hired in January rose to 183,000 from 74,000 in December, according to the median estimate of economists surveyed by Bloomberg.
National benchmark indexes climbed in every western-European market today. Germany’s DAX gained 1.5 percent, France’s CAC 40 added 1.7 percent and the U.K.’s FTSE 100 advanced 1.6 percent.
All of the 19 industry groups in the Stoxx 600 rose, led by gauges of auto- and construction-related companies.
Daimler climbed 2.6 percent to 62.48 euros. The third-largest maker of luxury vehicles said earnings before interest and taxes from ongoing operations rose to 2.53 billion euros ($3.42 billion) from 1.74 billion euros a year earlier. That beat the 2.37 billion-euro average estimate of 15 analysts compiled by Bloomberg. Revenue gained 7.6 percent to 32.1 billion euros on demand for the new Mercedes-Benz CLA coupe and revamped flagship S-Class sedan.
Volvo advanced 4.6 percent to 89.40 kronor. The world’s second-biggest truckmaker reported fourth-quarter operating profit of 3.08 billion kronor ($471 million), exceeding analysts’ projections for 2.04 billion kronor. Volvo also said it will fire 4,400 employees, extending a previously announced reduction of 2,000 jobs. The majority of the cuts will take place in 2014.
Alcatel-Lucent jumped 9.2 percent, the most since Oct. 31, to 3.31 euros. The Paris-based company posted net income of 134 million euros, compared with a 1.56 billion-euro loss a year earlier. It also got a binding offer from China Huaxin for its business that sells telecommunications equipment and services. Alcatel will keep a 15 percent stake in the unit.
Pohjola Bank Plc surged 18 percent to 16.80 euros, its highest price since at least October 1992. Finland’s OP-Pohjola Group offered to buy the remaining part of its publicly-traded subsidiary for 16.80 euros a share. That’s 18 percent above yesterday’s closing price. OP-Pohjola already holds 37 percent of Pohjola Bank’s share capital.
A gauge of health-care companies posted the smallest gain on the Stoxx 600. AstraZeneca Plc lost 1.6 percent to 3,815.5 pence after the U.K.’s second-biggest drugmaker forecast 2014 profit will fall more than analysts had estimated.
Sanofi dropped 2.7 percent to 69.40 euros. France’s largest drugmaker estimated that annual profit will increase no more than 7 percent. Analysts had predicted an 8 percent gain, based on the average of 15 estimates compiled by Bloomberg.
Dassault Systemes SA slumped 7.3 percent, its biggest decline since Oct. 14, to 80.72 euros. The French developer of 3D-design software forecast earnings in 2014 will be no more than 3.50 euros a share, trailing the 3.78 euros projected by analysts surveyed by Bloomberg. The company reported fourth-quarter sales of 566 million euros, falling short of the 568 million euros estimated by analysts.