Europe Stocks Inch Higher Amid Mixed Earnings as Miners Advance

Updated on
  • Deutsche Bank rises after posting surprise quarterly profit
  • Lloyds, Airbus slide after results; Electrolux gains

BOJ Surprise: Kuroda's Act of Market Defiance?

European stocks edged higher as gains in commodity producers helped erase an earlier drop and investors assessed earnings reports.

Anglo American Plc and ArcelorMittal jumped more than 6.9 percent, tracking metal prices higher. Banking results were also at the fore. Deutsche Bank AG rose 4 percent after it posted a surprise profit. Banco Bilbao Vizcaya Argentaria SA slid 6.8 percent after its quarterly earnings tumbled 54 percent, missing estimates. Lloyds Banking Group Plc lost 1.7 percent after its revenue and net income fell.

The Stoxx Europe 600 Index added 0.2 percent at the close of trading. It fell as much as 1.5 percent earlier as the Bank of Japan refrained from boosting stimulus. A rebound since a February low has lost steam in the past week as the earnings season picked up pace. After reaching an almost four-month high on April 20, the benchmark fell for three of the past five sessions.

“The last thing I do really expect is a sustainable rally in stock prices,” said Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf, Germany. “Earnings in a nutshell look OK, but as earnings estimates further down the road are still too high, there will be a negative trend in earnings revisions.”

The BOJ’s lack of response to a strengthening yen disappointed investors seeking impetus from central-bank policy to send shares higher. In the U.S., the Federal Reserve held off raising rates yesterday, while omitting a previous reference to risks stemming from global economic developments. Worries over China’s slowdown and a rout in crude spurred stock plunges at the start of the year, and the Stoxx 600 is still 16 percent below a May record.

In Europe, where the earnings season is under way, analysts have been slashing estimates for this year. They project profit at Stoxx 600 companies will slide 2.2 percent in 2016, before growing at a double-digit pace in the next three years.

Airbus Group NV was among other shares active on corporate news. It fell 4.6 percent after reporting a drop in earnings and saying fresh problems with a transport plane could hurt future profit. Sanofi retreated 1.1 percent after making an unsolicited offer to buy Medivation Inc. for about $9.3 billion in cash.

Tullow Oil Plc surged 12 percent after saying production at its flagship field offshore Ghana, which has been halted for more than a month, will resume in a few days. Electrolux AB and Clariant AG jumped at least 8 percent after reporting earnings that beat analysts’ estimates.

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