European Stocks Retreat as Tension Escalates in CrimeaInyoung Hwang
European stocks declined for a second day as tension escalated in Crimea, following Ukraine’s change of government.
WPP Plc slid 3.5 percent and Allianz SE dropped 2.3 percent after posting profit that missed estimates. Royal Bank of Scotland Group Plc slumped 7.7 percent after the state-owned lender reported its biggest full-year loss since receiving a bailout in 2008. Man Group Plc rallied 14 percent after the world’s largest publicly traded hedge-fund firm announced a $115-million stock buyback.
The Stoxx Europe 600 Index slipped 0.2 percent to 337.21 at the close of trading. The benchmark dropped yesterday as Credit Suisse Group AG dragged banks lower after a person familiar with the matter said that the Securities and Exchange Commission began an investigation into its accounting last year.
“The market is split between a gross amount of liquidity and a serious situation in Crimea, and -- unfortunately -- the Crimea situation will prevail,” Justin Haque, an equity sales trader at Hobart Capital Markets LLP in London, said by telephone. “There was a lot of fizz in this market, so you only needed to have a small geopolitical earthquake, and this is actually not a small problem.”
Lawmakers in Crimea, part of the Russian-speaking south of Ukraine, agreed to hold a referendum on the status of the region on May 25, Interfax reported. Russia ordered a series of surprise military exercises along its border with Ukraine late yesterday. The country’s Black Sea fleet leases its main base in Sevastopol on the Crimean peninsula. Oleksandr Turchynov, Ukraine’s acting president following the departure of Viktor Yanukovych at the weekend, said he would regard operations by Russia’s Black Sea forces outside their base as aggression.
“Instability in the Ukraine, particularly if there’s Russian intervention, will be taken very badly by markets,” Percival Stanion, the London-based head of the multi-asset group at Baring Asset Management, which manages about $60 billion, said by telephone. “People aren’t worried about Ukraine in its own right, but it would push Russia into the practically un-investable camp.”
In the U.S., Federal Reserve Chair Janet Yellen repeated that the central bank will probably reduce its monthly asset purchases at regular intervals if the labor market continues to improve. She testified before the Senate Banking Committee in Washington today.
A Commerce Department release showed that durable-goods orders dropped 1 percent in January. Economists had predicted the measure would fall 1.7 percent. A Labor Department report showed jobless claims unexpectedly rose by 14,000 to 348,000 last week.
National benchmark indexes declined in 11 of the 18 western-European markets. The U.K.’s FTSE 100 climbed 0.2 percent, while France’s CAC 40 slipped less than 0.1 percent. Germany’s DAX fell 0.8 percent.
WPP dropped 3.5 percent to 1,285 pence. The world’s largest advertising company posted profit before interest and taxes of 1.66 billion pounds ($2.8 billion) for 2013. That fell short of the 1.69 billion-pound average estimate of nine analysts. Currency fluctuations lowered the company’s profit margin by 0.2 points last year, WPP said.
Allianz slid 2.3 percent to 128 euros. Europe’s biggest insurer reported fourth-quarter net income of 1.26 billion euros ($1.7 billion), falling short of the 1.31 billion euros projected by analysts.
RBS plunged 7.7 percent to 326.6 pence. The bank said its net loss widened to 9 billion pounds in 2013 from 6.1 billion pounds in 2012. Chief Executive Officer Ross McEwan outlined plans to shrink its investment-banking and overseas operations.
Essilor International SA lost 3.2 percent to 76.33 euros. The French maker of contact lenses reported net income in 2013 of 593 million euros, missing the 608 million-euro average estimate of analysts.
A.P. Moeller-Maersk A/S slipped 3.4 percent to 63,850 kroner. The world’s largest container-shipping line said Ebit declined 7.5 percent to 41.2 billion kroner ($7.6 billion) in 2013, missing the 43.1 billion-kroner average of analyst estimates compiled by Bloomberg.
Man Group rallied 14 percent to 96.1 pence for the biggest gain in the Stoxx 600. The company also said clients added $700 million to its funds in the three months through the end of the year, the second consecutive quarter of inflows.
Veolia Environnement SA jumped 8.2 percent to 13,80 euros, its highest price since October. Antoine Frerot, the chairman and CEO of Europe’s biggest water utility, forecast that revenue, operating income and net income would climb in 2014.
GDF Suez advanced 6 percent to 18.62 euros. France’s largest gas supplier forecast net recurring income of at least 3.3 billion euros for this year. That exceeded the 3.23 billion euros estimated by analysts.
Royal Ahold NV gained 4 percent to 13.82 euros. The Dutch owner of Stop & Shop and Giant stores said fourth-quarter underlying operational income fell less than analysts had expected as sales in the Netherlands increased.