FRANKFURT: European stocks ended Wednesday sharply lower, after a raft of major earnings, a sharp decline in mining stocks and renewed pressure in oil prices weighed on sentiment.
The pan-European STOXX 600 saw fresh falls in late trade, closing down some 1.1 percent provisionally. All major sectors closed in negative territory.
London’s FTSE 100 was dragged down by its miners, closing down 1.2 percent; while France’s CAC 40 slipped 1.1 percent and Germany’s DAX closed 1 percent lower.
In markets outside of Europe, Asia saw declines and closed lower overnight as oil prices came under pressure during trade, while U.S. markets traded lower on Wednesday, with investors digesting mixed data and declines in the energy sector.
Oil prices reversed losses for most of Europe’s trade but came under renewed pressure in late trade, after U.S. crude stockpiles increased by 2.8 million barrels in the last week, above analyst forecasts. Brent crude was roughly flat at Europe’s close, trading around $44.91, while and U.S. crude came off session highs, hovering around $43.82.
In stocks, Royal Dutch Shell posted a sharp fall in earnings for the first three months of 2016 on Wednesday, as the tumble in oil prices continued to take its toll. Earnings on a current cost of supplies (CCS) basis came in at $0.8 billion, versus $4.8 billion in the first quarter of 2015, sending shares to close 2.8 percent down.
European Central Bank president Mario Draghi addresses a news conference at the ECB headquarters in Frankfurt, December 3, 2015.
Meanwhile, basic resources saw a second day of sharp declines as key stock news, strengthening in the U.S. dollar and mixed prices, weighed on the sector. BHP Billiton fell 5.8 percent after Brazilian prosecutors filed a $44 billion lawsuit against the miner and its partner Vale over the collapse of a dam that killed 17 people.
Meanwhile, Randgold Resources reported a 13 percent rise in net profit to $54 million in the first quarter of 2016, however shares slumped to close 11.7 percent lower, after the firm’s metal production declined 11 percent in the quarter, compared to the previous record quarter.
And Glencore’s shares sank over 3 percent after a production report showed a fall in production of copper, zinc, lead, coal and oil as a result of cutting production due to low commodity prices.
Investors have been digesting a slew of earnings on Wednesday. In the banking sector Austria’s Erste Group saw net profit rise in the first-quarter of 2016 to 274.7 million euros ($315.6 million) from 225.8 million during the same period last year. Shares sank over 5 percent.
France’s Societe Generale said net income rose 6.5 percent in the first quarter to 924 million euros ($1.06 billion), but Séverin Cabannes, deputy chief executive of the lender warned that “profitability in the banking industry will never come back to the pre-crisis level”, but shares jumped 1.7 percent.
Elsewhere in earnings, Anheuser-Busch InBev, the world’s biggest brewer, closed trade sharply lower after it reported a 2.5 percent rise in core earnings in the first three months of 2016, but said its volumes declined, mainly due to the “challenging macroeconomic conditions” in Brazil.
Shares in Apple supplier Dialog Semiconductor fell to the bottom of the STOXX 600, ending 8.6 percent down, after underlying operating profit fell 58 percent year-on-year in the first quarter.
Meanwhile, Danish shipping giant Moller-Maersk rallied some 6.4 percent after it said that net profit fell to $224 million, but this was better than expectations.
Air France-KLM saw a turnaround in the first-quarter of 2016, posting earnings before interest, tax, depreciation and amortization (EBITDA) of 266 million euros, compared to a 26 million euro loss in the same period last year. Shares sank over 4 percent.
In major U.K. earnings, retailer Next which reported a slight fall in sales between 31 January to Monday 2 May and warned sales could fall as much as 3.5 percent this year. Despite this, it was a top performer, closing up 3.4 percent.
And supermarket chain Sainsbury’s reported a 13.8 percent decline in net profit for the year to March 12 and warned that the market will remain competitive “for the foreseeable future”, sending shares over 6 percent lower. Tesco was dragged down by this, closing down 5.4 percent.
On Wednesday, it was revealed that InterContinental Exchange (ICE) had said it had no intention to make offer for the London Stock Exchange (LSE) at this present time. LSE shares sank as much as 7 percent before closing down 4.2 percent.
