Europe Stocks Decline as Investors Weigh Unrest, EarningsInyoung Hwang
European stocks fell for a second day as investors weighed unrest in Ukraine and the Middle East, and watched companies’ financial results.
Wincor Nixdorf AG slid the most since May after the maker of automated teller machines posted third-quarter revenue that fell short of analysts’ estimates. Aberdeen Asset Management Plc slid 5.3 percent after reporting a drop in assets under management. Ryanair Holdings Plc added 2.7 percent after lifting its fiscal full-year profit goal as quarterly profit more than doubled. Reckitt Benckiser Group Plc rose 2.7 percent after saying it will spin off its pharmaceutical business.
The Stoxx Europe 600 Index fell 0.2 percent to 341.34 at the close of trading after sliding as much as 0.7 percent and rising as much as 0.3 percent. The equity gauge climbed 0.7 percent last week, a second weekly gain, as companies from Danske Bank A/S to Actelion Ltd. raised their annual earnings projections. The gauge trimmed its advance on July 25 after companies including LVMH Moet Hennessy Louis Vuitton SA and Statoil ASA posted profit that missed estimates.
“Looming Russian sanctions and ongoing Gaza talks will probably overshadow positive earnings surprises,” Alex Neil, head of equity and derivatives trading at EFG Bank in Geneva, said in an interview. “My own gut feeling is that investors will look for excuses to take profits in the short term.”
National benchmark indexes fell in 15 out of 18 western-European markets. Germany’s DAX slid 0.5 percent and the U.K.’s FTSE 100 lost less than 0.1 percent. France’s CAC 40 increased 0.3 percent. The volume of shares changing hands in Stoxx 600-listed companies was 19 percent lower than the 30-day average, according to data compiled by Bloomberg.
The Obama administration said it had satellite photos showing Russia firing across the border at Ukraine forces, as the U.S. and Europe consider more sanctions. German Economy and Energy Minister Sigmar Gabriel said that bank accounts held in Europe by oligarchs close to Putin should be frozen.
International pressure mounted on Israel to end its three-week offensive in the Hamas-controlled Gaza Strip, with President Barack Obama and the United Nations Security Council demanding an immediate truce.
European shares extended losses after a report from the National Association of Realtors showed a pending home-sales gauge in the U.S. slipped 1.1 percent in June, following a revised 6 percent gain in May. Economists had forecast a 0.5 percent increase. Separately, a purchasing managers’ index for the U.S. services industry remained at 61 in July, according to preliminary data from Markit Economics.
Goldman Sachs Group Inc. cut its rating on stocks to neutral, the equivalent of hold, for the next three months, saying they are at risk of a brief selloff, according to a quarterly strategy report July 25. The bank also lowered corporate credit to underweight and predicted that U.S. government bond yields will increase.
Investors are also watching corporate earnings this week. Of the Stoxx 600 companies that have reported results this season, 57 percent have exceeded profit estimates and 51 percent have beaten sales projections, data compiled by Bloomberg show.
“I am fairly optimistic for companies that are delivering,” said Peter Braendle, a money manager in Zurich at Swisscanto Asset Management AG, where he helps manage 500 million Swiss francs ($553 million). “Tell me what is an attractive alternative to equities? I do not know one.”
Wincor Nixdorf lost 4.5 percent to 37.96 euros after saying third-quarter revenue reached 573 million euros ($770 million), falling short of the 600 million euros that analysts had projected. The company also said 2014 sales will be in line with last year’s after previously forecasting a 4 percent gain.
Aberdeen dropped 5.3 percent to 435 pence. Europe’s biggest publicly traded money manager said assets under management fell 0.6 percent to 322.5 billion pounds ($548 billion) in the quarter ended June 30 from the prior three months.
TNT Express NV plunged 5.8 percent to 6.11 euros. The Dutch package-delivery company reported second-quarter sales of 1.66 billion euros, missing the 1.69 billion euros that was estimated by analysts on average.
Outotec Oyj fell 3.4 percent to 8.12 euros. The Finnish mining-equipment supplier cut its forecast for sales in 2014 to no more than 1.6 billion euros, after earlier predicting as much as 1.8 billion euros.
A gauge of automakers and car-parts companies posted the biggest decline out of 19 industry groups in the Stoxx 600. Daimler AG slid 3.2 percent to 63.08 euros, while Porsche Automobil Holding SE lost 3.5 percent to 70.91 euros.
Ryanair rose 2.7 percent to 7.03 euros. Europe’s biggest discount carrier said profit after tax will probably be 620 million euros to 650 million euros for the year through March 2015, up from a previous forecast of 580 million euros to 620 million euros. The Dublin-based airline also said profit after tax for the three months ended June 30 more than doubled to 197 million euros.
Reckitt Benckiser climbed 2.7 percent to 5,205 pence. The spinoff will occur in the next year and will be a U.K.-listed company. Slough, England-based Reckitt Benckiser also reported that sales in the second quarter climbed 4 percent, excluding the pharmaceutical business. That matched analysts’ estimates.