European Stocks Post Weekly Drop Amid Global Tech SelloffTrista Kelley
European stocks posted their worst weekly slump in a month amid a global rout that sent technology shares tumbling.
ARM Holdings Plc, the semiconductor company whose designs power Apple Inc.’s iPhone and iPad, dropped 3.8 percent. Suedzucker AG sank the most since at least 1998 after forecasting annual profit and sales that missed estimates. LVMH Moet Hennessy Louis Vuitton SA added 5.7 percent as the world’s largest luxury-goods company posted the fastest growth in fashion and leather-goods sales in two years.
The Europe Stoxx 600 Index declined 3.1 percent this week, the most since March 14, to 328.77. Technology shares triggered a slide in U.S. equities and concern grew that valuations were stretched. European shares reached a six-year high last week.
“If we’re trying to tease out what it was about this week it could be a sense of following where the U.S. is going and also there have been some questions about some of these heroic valuations,” said Frances Hudson, a strategist at Standard Life Investments Ltd. in Edinburgh, which oversees $294 billion. “The market has decided to be more discriminating.”
The Stoxx 600 traded at a high of 14.8 times estimated earnings on April 4, compared with a five-year average of 12.3, data compiled by Bloomberg show. This week’s decline took its valuation to 14.4. The Nasdaq Composite Index slumped 3.1 percent on April 10 for its biggest decline since November 2011.
Industrial-goods companies and miners dropped this week. Chinese imports unexpectedly tumbled last month, falling 11 percent in March from a year earlier, the nation’s customs administration reported. The median economist estimate had called for a gain of 3.9 percent.
Benchmark indexes fell in every western-European market this week, except Iceland. Germany’s DAX retreated 3.9 percent, while the U.K.’s FTSE 100 slid 2 percent and France’s CAC 40 lost 2.7 percent.
A gauge of technology shares in the Stoxx 600 declined 4.1 percent. ARM Holdings dropped 3.8 percent, and United Internet AG slumped 12 percent. Logitech International SA, the world’s biggest maker of computer mice, slid 9.2 percent and Infineon Technologies AG, Europe’s second-largest semiconductor maker, retreated 6.9 percent.
Banks and travel and leisure stocks dropped the most among 19 Stoxx 600 industry groups this week. Societe Generale SA lost 8.2 percent, and International Consolidated Airlines Group SA, the parent of British Airways, sank 11 percent.
Suedzucker slumped 26 percent to its lowest price since September 2010. The maker of sugar, starch and bakery additives said revenue will fall to about 7 billion euros ($9.7 billion) for its financial year ending in February 2015 from 7.7 billion euros, missing analysts’ estimates of 7.5 billion euros. The company also predicted operating profit of 200 million euros, compared with the 608 million-euro average projection.
Thales SA fell 7.6 percent, the biggest weekly drop since 2011. JPMorgan Chase & Co. downgraded the French defense-electronics maker to neutral from overweight, meaning investors should no longer buy the stock. The company’s forecasts for sales and cost reduction through 2017-2018 are weaker than estimated, the brokerage said after Thales had an investor day.
Sports Direct International Plc tumbled 16 percent, the most since 2011, after saying founder Mike Ashley sold a 4 percent stake. The 208th richest person in the Bloomberg Billionaires Index sold it after acquiring 11 percent of House of Fraser Ltd.
LVMH gained 5.7 percent after reporting that first-quarter fashion and leather-goods sales climbed 9 percent on an organic basis, the fastest growth since the first quarter of 2012. That beat the average analysts prediction of 6 percent growth.