Bloomberg News

European Stocks Are Little Changed Amid Earnings, Ukraine Crisis

May 07, 2014

European stocks were little changed as disappointing earnings from Fiat SpA to Societe Generale SA offset a rally in Credit Agricole SA after its profit surged, while investors watched the crisis in Ukraine.

Fiat tumbled the most since August 2011 and Societe Generale slid 0.8 percent. Cie. de Saint-Gobain SA lost 3.3 percent after investor Wendel SA said it will cut its stake in Europe’s biggest building-materials supplier. Credit Agricole (ACA) gained the most in almost a year after saying first-quarter profit surged 85 percent. Henkel AG advanced the most since November 2010 after reporting better-than-estimated earnings.

The Stoxx Europe 600 Index closed little changed at 336.03. The benchmark equity gauge has fallen 0.9 percent from a six-year high on April 4 as violence between Ukrainian troops and pro-Russian separatists escalated.

“It seems we’re now entering a phase where there is a bigger difference between those companies delivering good numbers and bad numbers,” said Espen Furnes, who helps oversee about $75 billion at Storebrand Asset Management in Oslo. “The market seems to be less forgiving with companies not delivering as expected. We’re probably going to see a further dispersion in performance on a stock to stock basis. Financial markets need to prepare for a prolonged period of unrest in Ukraine.”

U.S. Sanctions

U.S. Secretary of State John Kerry said yesterday that plans by pro-Russian separatists in Ukraine’s Donetsk region to hold a May 11 referendum on secession were illegal and contrived. He said his country is ready to impose sanctions should Russia fail to withdraw its support for separatists.

Russian President Vladimir Putin today called for the referendum to be postponed and said the Ukrainian presidential vote was a move in the right direction.

Ukrainian acting Interior Minister Arsen Avakov said this week that four soldiers and about 30 pro-Russian separatists were killed in a May 5 clash. The government began an assault against pro-Russian rebels in Donetsk on April 13, after gunmen seized buildings and took several dozen captives. Russia has about 40,000 troops along the Ukrainian border, according to the North Atlantic Treaty Organization.

National benchmark indexes fell in 10 of the 18 western European markets today. The U.K.’s FTSE 100 slipped less than 0.1 percent, France’s CAC 40 added 0.4 percent and Germany’s DAX climbed 0.6 percent.

Fiat Falls

Fiat plunged 12 percent to 7.48 euros after saying earnings before interest, taxes and one-time items fell to 622 million euros ($865 million) in the first quarter, trailing the 854 million euros estimated by analysts in a Bloomberg survey.

Societe Generale lost 0.8 percent to 43.52 euros after saying net income decreased to 315 million euros from 364 million euros a year earlier. Analysts on average had projected 868 million euros. France’s second-largest bank by market value wrote down 525 million euros at its Russian unit, citing a declining ruble and uncertain environment.

HSBC Holdings Plc (HSBA) dropped 1.3 percent to 596.5 pence after Europe’s largest bank said customer activity remained muted in April. First-quarter pretax profit fell 20 percent to $6.79 billion, in line with analysts’ estimates.

CGG SA (CGG) lost 11 percent to 10.93 euros. The world’s largest seismic surveyor of oilfields posted a first-quarter net loss of $39 million, wider than the $5.4 million loss predicted by analysts in a Bloomberg survey.

Saint-Gobain

Saint-Gobain retreated 3.3 percent to 42.22 euros. Wendel said it will sell 24 million shares, or about 4.3 percent, of the French company to institutional investors. Wendel will hold about 12 percent of Saint-Gobain’s share capital and 20 percent of the voting rights after the sale. Those holdings will be pared to 11.5 percent of the equity and 19 percent of the voting rights following a planned dilution in the stock.

Finmeccanica SpA tumbled 7.5 percent to 6.05 euros. The defense company late yesterday posted first-quarter earnings before interest, taxes and amortization of 153 million euros, missing the 166 million euros projected by analysts in a Bloomberg survey.

Credit Agricole rallied 6.8 percent to 11.86 euros as France’s third-largest bank said net income rose to 868 million euros, in line with analysts’ estimates. The lender said in March it is targeting at least 4 billion euros of annual net income by 2016, compared with 2.51 billion euros last year.

Henkel Profit

Henkel gained 5.4 percent to 83.05 euros. The German maker of Persil washing detergent said first-quarter earnings before interest and taxes, excluding one-time items and restructuring costs climbed 3.3 percent to 619 million euros on higher demand from emerging markets such as China, Russia and Turkey. Analysts had predicted 600.8 million euros.

Siemens AG climbed 2.1 percent to 95.84 euros as Europe’s biggest engineering company said it will buy some energy assets from Rolls Royce Holdings Plc for $1.3 billion. The company also plans to list its hearing-aid unit and separate management of its health-care business from power generation, oil and gas operations. The measures will boost productivity by about 1 billion euros a year, starting from the end of fiscal 2016, the company forecast.

Separately, Siemens said fiscal second-quarter income from continuing operations before taxes rose 21 percent to 1.61 billion euros. That fell short of the 1.78 billion euros predicted by analysts in a Bloomberg survey.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net Alan Soughley


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