Europe Stocks Rise as Total, Statoil Lead Oil Companies Higherby
Energy companies pushed European equities up for a second day amid better-than-estimated earnings reports and as oil reached $45 a barrel.
Statoil ASA jumped 6.1 percent after Norway’s biggest oil company unexpectedly posted a profit, and Total SA gained 2.8 percent as its earnings beat estimates. Adidas AG climbed 6 percent after raising its annual profit forecast as consumers spend more before this year’s Euro soccer tournament. Munich Re fell 3.8 percent, dragging insurers lower, after forecasting lower profit than previously expected.
The Stoxx Europe 600 Index rose 0.3 percent at the close of trading, reversing losses of as much as 0.4 percent. With the rebound since the February low losing steam and the earnings season ongoing, investors are keeping a close eye on central-bank policy. The Federal Reserve announces its rate decision after the close of European markets today, while the Bank of Japan will release it tomorrow.
“People are questioning valuations because earnings growth just isn’t there,” said Francois Savary, chief investment officer at Prime Partners in Geneva. “It will be very difficult for stocks to gain more ground, especially with the higher euro. There’s also the issue of Fed credibility, and the fact that Yellen is looking at international events as a reason to not raise rates.”
The rebound in European equities since their February low has been looking increasingly shaky amid growing concern over profit growth -- now analysts project a decline for 2016 -- and economic data that have been missing forecasts. The Stoxx 600 has lost 4.8 percent this year, led by slumps at Italian banks on concern over bad loans. Still, its valuation of about 15 times estimated earnings remains above its five-year average.
Among other stocks moving on corporate news on Wednesday, Banco Santander SA added 1.6 percent after net income beat analysts estimates. Airport operator Aena SA rose 1.7 percent after reporting an increase in earnings. Societe BIC SA sank 6.5 percent after reporting a decline in margins. Swedish lender SEB AB declined 3.9 percent after posting a bigger loss than projected.
Greek stocks fell the most among western-European markets, with the benchmark ASE Index down 2.5 percent. The nation failed to resolve disagreements with creditors, prompting Prime Minister Alexis Tsipras to seek a euro-area leaders’ summit, bringing back memories of last year’s drama when a quarrel over bailout terms almost pushed the country out of the currency bloc.
Spain’s IBEX 35 Index was among the region’s biggest gainers, partly thanks to Santander and Aena, even as the nation’s king called for a new general election after parliament failed to choose a prime minister for the first time in the country’s democratic history.