European Stocks Are Little Changed Before Fed DecisionNamitha Jagadeesh
European stocks were little changed, following two days of gains, as investors awaited a speech by Federal Reserve Chair Janet Yellen to gauge the central bank’s views on its stimulus program and interest rates.
Inditex SA added 4.9 percent after saying sales rose in the first six weeks of the fiscal year. Bayerische Motoren Werke AG jumped to a record after forecasting pretax profit will rise this year. Ophir Energy Plc tumbled to its lowest price since December 2011 after saying it discovered little evidence of hydrocarbons at a well in Gabon.
The Stoxx Europe 600 Index dropped 0.1 percent to 327.63 at the close of trading. The gauge slid 4.8 percent from Feb. 25 through the end of last week amid a standoff between Russia and the West over Crimea. It extended this week’s gain yesterday as Russian President Vladimir Putin said he isn’t seeking to annex other parts of Ukraine.
“Investors are focused on what Janet Yellen says about forward guidance,” Stewart Richardson, who helps manage about $100 million as chief investment officer at RMG Wealth Management LLP, said by phone. “The Fed is moving away from quantitative guidance towards a qualitative one. We’ve seen a bit of a bounce in European equities in the last two days. We could see a potential slowing of upward momentum over the next few days.”
Fed officials today end a two-day policy meeting at which they will decide whether to slow the central bank’s monthly asset-purchase program. They will announce the outcome after European markets close, followed by Yellen’s speech.
The Federal Open Market Committee will cut its monthly bond buying by $10 billion to $55 billion and continue reductions at that pace at every meeting before announcing an end to the program at its Oct. 28-29 gathering, economists said in a survey. The Fed will also probably scrap its 6.5 percent jobless rate threshold to adopt qualitative guidance for signaling when it will consider raising the benchmark interest rate, according to the survey.
National benchmark indexes declined in 11 of the 18 western European markets. The U.K.’s FTSE 100 lost 0.5 percent, Germany’s DAX added 0.4 percent, and France’s CAC 40 slipped 0.1 percent.
Inditex climbed 4.9 percent to 108.10 euros after the owner of the Zara clothing chain said sales in local currencies rose 12 percent from Feb. 1 to March 15. Profit for 2013 totaled 2.38 billion euros ($3.31 billion), Inditex also said. That compared with the average analyst projection of 2.39 billion euros.
BMW advanced 7.3 percent to 86.60 euros. The world’s biggest maker of luxury cars said pretax profit this year will rise by at least a high single-digit percentage above 2013’s 7.91 billion euros, boosted by new models and lower development spending.
Brenntag AG gained 0.8 percent to 132 euros after recommending a payout of 2.60 euros per share, surpassing the Bloomberg Dividend estimate of 2.40 euros. The world’s largest distributor of chemicals also said it will propose a three-for-one stock split at its annual general meeting on June 17.
Aurubis AG climbed 0.8 percent to 38.15 euros as Goldman Sachs Group Inc. added the stock to its conviction list after upgrading it to buy from neutral. The brokerage said the copper producer’s recent decline in line with the metal is unwarranted as it has little exposure to spot prices. Aurubis tumbled 15 percent this year through yesterday’s close. Copper fell 12 percent in the same period.
Barclays Plc rose 2.3 percent to 241.5 pence after people familiar with the matter said the second-largest U.K. lender by assets will seek offers in the next month for its Index, Portfolio and Risk Solutions unit in a sale that could fetch $400 million. CME Group Inc., which had approached Barclays about buying the business last year, could make an offer, one of the people said.
Ophir tumbled 15 percent to 251.70 pence after saying drilling operations at its Padouck Deep-1 well offshore Gabon yielded no significant amount of hydrocarbons.
HeidelbergCement AG declined 1.8 percent to 60.22 euros after saying that net debt at Dec. 31, 2013 rose to 7.5 billion euros as it increased its stake in joint ventures and paid a fine for cartel infringements dating back to the 1990s. That exceeded the average analyst estimate of 7.2 billion euros.
Antofagasta Plc slipped 5.3 percent to 785 pence after Deutsche Bank AG downgraded the copper producer to sell from hold, citing limited scope for cash returns because of low earnings and cash-flow growth. Separately, Credit Suisse Group AG lowered its recommendation on the shares to underperform, similar to sell, from neutral. The brokerage predicted few catalysts for further gains.
The London-listed company controlled by Chile’s Luksic family fell 2.2 percent yesterday after Head of Development Alejandro Rivera said it expects capital expenditure to increase about 30 percent this year.
A gauge of insurers posted the second-biggest decline of the 19 industry groups in the Stoxx 600. U.K. Chancellor of the Exchequer George Osborne scrapped a requirement for British retirees to buy pension annuities. Legal & General Group Plc plunged 8.4 percent to 211.2 pence and Aviva Plc dropped 5.2 percent to 490.4 pence.