European stocks finished mostly around the flatline Thursday after the European Central Bank (ECB) left its key interest rate unchanged and as investors digest a slew of earnings from major companies.
The pan-European STOXX 600 reversed from its earlier lows, to close roughly flat; while sectors pointing in different directions.
Looking at Europe’s main bourses, the U.K.’s FTSE 100 fell 0.4 percent at the close, with France’s CAC also slipping 0.1 percent. Germany’s DAX however popped 0.14 percent.
The ECB left its benchmark refinancing rate at 0 percent and its interest rate on deposit facility remained at -0.40 percent. The bank was widely expected to preserve its zero interest rate policy, but the market is anticipating further monetary policy stimulus further down the line from global central banks.
In the regular media conference hosted by the central bank, president Mario Draghi said he did not want to underplay the challenges facing the euro zone, including high levels of bad loans in the banking sector and geopolitical instability relating to terrorism and the U.K.’s decision to leave the European Union.
Stocks fluctuated during the conference, with banks recovering in afternoon trade. In individual banking stocks, the majority of Italian banks outperformed fellow European lenders, with BMPS, UniCredit and Banco Popolare all up above 2 percent each. Meanwhile most U.K. banks were under pressure during trade.
Markets in Europe have ignored the positive trend seen in their Asia counterparts on Thursday. Japanese shares led regional peers as local media reports suggested a sizable stimulus package from the Abe government was on the horizon.
Citing sources close to the matter, Japan’s Kyodo News reported that the Japanese government was arranging to compile a stimulus package of at least 20 trillion yen ($188 billion)—more than initially expected—to help the domestic economy emerge from deflation, and to fend off possible adverse effects of Brexit.
Meanwhile, in the U.S. on Thursday, stocks were mostly mixed as investors kept an eye on corporate earnings and economic data.
Travel stocks fall, miners charge ahead
In European business news, Lufthansa, Germany’s largest airline, cut its full-year profit target on Wednesday saying advance bookings to Europe had declined significantly due to “terrorist attacks in Europe and to greater political and economic uncertainty”. The news sent shares down over 8 percent, before paring, currently down 5.5 percent.
And easyJet’s chief executive struck a similar tone, saying that terrorism is at “unprecedented” levels. Shares in easyJet fell over 5 percent after third-quarter revenue per seat decreased 8.3 percent on a constant currency basis. The negative sentiment from the two stocks rippled across the travel and leisure sector, with other airlines like Air France-KLM, IAG and Ryanair all trading sharply lower.
Meanwhile, basic resources outperformed the broader market on Thursday, helped by positive numbers from Norsk Hydro. The aluminium producer raised its forecast for global aluminium demand including for China, after reporting underlying profit that beat analyst forecasts. Shares jumped 6.5 percent.
Steel producer Arcelormittal was trading higher after JPMorgan, Berenberg, UBS and Deutsche Bank raised their price target for the stock.
Major earnings in focus
In other earnings news, Swiss drugmaker Roche on Thursday confirmed its outlook for 2016 and reported sales for the first half of the year ahead of analyst expectations, but shares were off 1 percent.
In the luxury space, French fashion house Hermes said second-quarter sales were up 8.1 percent, sending shares close to 4 percent up.
Unilever reported better-than-expected second-quarter sales growth of 4.7 percent, however the stock was under pressure during trade; while Swedbank posted gains of 1.5 percent after its profit also beat.
Advertising giant Publicis jumped over 3.5 percent after it reported a 5 percent year-on-year rise in net profit for the first half of 2016.
On the STOXX 600, Europe’s best performer was , up around 10.5 percent, after the U.K. Bookmaker announced that its CEO James Henderson was stepping down with immediate effect; while slumped over 10 percent, after it said it had agreed to buy Relypsa for $1.53 billion.
On the STOXX 600, Europe’s best performer was William Hill, up around 10.5 percent, after the U.K. Bookmaker announced that its CEO James Henderson was stepping down with immediate effect. Meanwhile healthcare group Galenica slumped over 10 percent, after it said it had agreed to buy Relypsa for $1.53 billion.
Source: CNBC
