Europe Stocks Slip From 7-Week High as EON Falls After Earningsby
Utilities, health-care companies are biggest Stoxx 600 losers
Benchmark index is still lower than its pre-Brexit level
European shares halted a five-day rally, retreating from their highest prices in almost seven weeks, on disappointing earnings at companies including EON SE and Novozymes A/S.
EON sank 6.9 percent, the most since June, as it reported a first-half loss, triggering a slide in the industry. Danish biotech company Novozymes sank 12 percent, pushing pharmaceutical companies to the biggest drop among sectors, as it reported profit that missed estimates and cut its sales outlook. Royal Dutch Shell Plc and Tullow Oil Plc dragged down energy companies as oil declined, while steelmakers including ArcelorMittal and Voestalpine AG fell more than 2 percent.
The Stoxx Europe 600 Index slipped 0.2 percent at the close, trimming a decline of as much as 0.4 percent. Trading was volatile, with the volume of shares changing hands about a third lower than the 30-day average. Germany’s DAX Index, which entered a bull market on Tuesday, dropped 0.4 percent, weighed down by EON and exporters such as ThyssenKrupp AG and Bayer AG as the euro strengthened.
“The earnings season hasn’t been spectacular, the oil price has gyrated again,” said Ben Kumar, an investment manager at Seven Investment Management LLP in London. His firm manages 10 billion pounds ($13 billion). “It’s enough, if you’ve made money, to go back to sit on the sidelines and not quite enough to get you back into the market yet. It’s not been a particularly loved rally.”
In the past five days, fresh Bank of England stimulus measures, better-than-forecast jobs data in the U.S. and corporate earnings helped the gauge of European equities rebound 12 percent from its low following the Brexit vote through Tuesday’s close. It’s still 0.7 percent away from its June 23 level, while U.S. and Asian stocks have already recovered.
Equity gauges of most western-European markets were in the red on Wednesday. France’s CAC 40 Index dropped 0.4 percent, while the U.K.’s FTSE 100 Index was little changed.
Among other stocks moving on earnings news, Belgium’s Ageas SA climbed 5 percent after posting insurance profit that topped projections. Prudential Plc rose 2.2 percent after it reported earnings that beat analyst estimates. Switzerland’s Adecco Group AG advanced 2.5 percent as the world’s largest staffing company reported profit that topped estimates. G4S Plc surged 16 percent after saying revenue rose and keeping its dividend.
Telecommunication company TDC A/S jumped 7 percent after keeping its 2016 outlook. Goldman Sachs Group Inc., which recommends buying the stock, said improving Danish earnings may spur a rally.
Entertainment One Ltd. rallied 10 percent after rejecting a takeover offer from ITV Plc, suggesting that it’s seeking a higher price. ITV added 0.9 percent.